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It is acknowledged that the full economic effects of investment in infrastructure might take longer than just a few years to show up in the data. What we find, however, is that these effects are not apparent in the period covered by this paper.
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For a complete list of all variables used and their definitions see Appendix A.
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It is important to highlight that there might be endogeneity problems in this econometric analyses and we partly use fixed effects to deal with this problem. However, it is acknowledged that there are other efficient methods that could be used to overcome this problem including instrumental variables, difference-in-difference estimation and system GMM.
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Further examination using domestic trade as a share of regional GDP reveals a positive association with economic growth.
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For robustness we have also considered import and export as shares of GDP in the estimations and our results do not change qualitatively.
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