Bridging distances and boosting economies: a panel FMOLS analysis of railway infrastructure

This research investigates the effects of railway infrastructure expansion on economic growth in countries with extensive railway networks, employing panel Fully Modified Ordinary Least Squares (FMOLS) for the period 2004–2023. The findings reveal a two-sided outcome that a rise of 1% in railway infrastructure will lead to economic growth decreasing by 0.035%, especially for countries with an extensive railway network already in place. Importantly, the analysis brings to fore that gross capital formation has a positive impact on growth as 1% increase in investment causes a 0.529% rise in GDP growth induced mainly by improved productivity. These results emphasize the pivotal role of infrastructure investment in stimulating long-term economic performance while underscoring the necessity for sustainable infrastructure planning that balances growth objectives with environmental and social considerations.