Economy Wide Impact of Investment in Road Infrastructure in Ethiopia: A Recursive Dynamic Computable General Equilibrium Approach

In current periods Ethiopia has been implementing huge investment in road infrastructure across the country. Despite the significant improvements in road length, accessibility and quality of roads, few researches were conducted on the impacts of investments in road infrastructure on economic growth, household income and consumption growth. These researches were conducted following the partial equilibrium or econometric techniques that lacks to address the interrelated effect in addition to the limitation that some of these studies were done for a specific road sector development programs and or specific areas
In this study an attempt has been made to examine economy wide impact of investment in road infrastructure using a recursive dynamic CGE model. The study used an updated version of the 2005/06 EDRI Social Accounting Matrix. Six simulations were considered. While the first three simulations were based on the existing and past Ethiopia policy which considered the average road density growth in the PASDEP period, the average density growth required to reach the middle income level and the average road density growth in the GTP period, the last three simulation were considered as robustness test.