THE ROLE OF INFRASTRUCTURE IN MEXICAN ECONOMIC-REFORM

This article estimates the relationship between the provision of publi c infrastructure and private output in sixteen sectors in Mexico. The sector-specific cost functions depend on wages, the cost of capital, a nd the nominal values of the stocks of three types of intrastructure: electricity, transport, and communications. The article concludes that infrastructure in electricity and communications generally reduces th e cost of sectoral production, but transportation infrastructure tends to increase costs of sectoral production. It appears that Mexican pub lic expenditure on electricity and communications has enhanced the pro ductivity of private production, but expenditure on transport may actu ally have had a detrimental effect on private output. In addition, alt hough in general labor and infrastructure are substitutes, in the case of electricity and communications infrastructure, capital and infrast ructure are complements. In the case of transport infrastructure these conclusions are reversed.