The Development Theory of Transportation Infrastructure Examined in the Context of Central and West Africa

Airports, Central Africa, Developing countries, Inland transportation, Navigable waterways, Roads, Rural transportation, Railways, Sub-Saharan Africa, Transportation infrastructure, West Africa,

Implications of Africa’s Transportation Systems for Development in the Era of Globalization

Colonial road-building, Colonial railways, Transportation planning, Economic development, Africa,

TWO-SECTOR STOCHASTIC GROWTH MODELS *

This paper develops the study of two-sector growth models of the form introduced by Arrow and Kurz (1970). We extend their deterministic model by allowing the population process to become random and by allowing the population to choose their level of effort. We find that under suitable conditions the government is able to tax and borrow in such as way as to induce the private sector to invest and consume along the path which the government considers optimal. Moreover, we also find that in some important cases the model can be solved explicitly in closed form, to the extent that we can write down expressions for tax rates and interest rates. This leads to new one-factor interest rate models, with related taxation policies; numerical examples show very reasonable behaviour. Copyright Blackwell Publishing Ltd/University of Adelaide and Flinders University 2005..