Abstract:Economic theory considers that as a capital, infrastructure investment can either promote economic development directly, or promote economic development through its spillover effects indirectly. This paper makes an empirical research on infrastructural investment data in Hubei between 1996 and 2010 by using C- D production function. The result shows that the output elasticity of rural infrastructure investment is 0.106, while the output elasticity of general fixed assets investment is 0.704, and the output elasticity of rural labor force is 0.296. Although the output elasticity of rural infrastructure investment is less than the output elasticity of general fixed assets investment and rural labor force, it plays a role in increasing returns to scale in the total function of Hubei rural economy. Therefore, this paper points out that the government should focus capital on direct production divisions which have large forward and backward linkages as well as quick return of short term investment. Meanwhile, the government should also maintain certain investment in the infrastructure divisions in order to provide material guarantee and support to the further development of direct production divisions and rural economy of Hubei province.