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Public Investment In Transportation Infrastructures And Industry Performance In Portugal

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  • Alfredo M. Pereira

    ()
    (Department of Economics, The College of William and Mary)

  • Jorge M. Andraz

    (Faculdade de Economia, Universidade do Algarve)

Abstract

The objective of this paper is to evaluate the effects at the industry level of public investment in transportation infrastructures in Portugal. The empirical results are based on VAR/ECM models for the Portuguese economy and for eighteen industries covering the whole spectrum of economic activity in the country. These models consider private-sector output, employment and investment as well as public investment. Empirical results at the aggregate level indicate that public investment has a positive effect on both private inputs as well as on private output and that it affects labor productivity positively. These aggregate results, however, hide a wide variety of industry-level effects. In absolute terms, the industries that benefit the most from public investment are Construction, Trade, Transportation, Finance, Real Estate, and Services. In turn, relative to their size, the industries that benefit the most are Mining, Non-Metal Products, Metal Products, Construction, Restaurants, Transportation, and Finance, and, therefore, public investment tends to shift the industry mix toward these industries. Accordingly, our empirical results suggest that although public investment has been a powerful instrument to enhance the long-term economic performance in Portugal it does so in a way that is rather unbalanced across industries.

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Bibliographic Info

Article provided by Chung-Ang Unviersity, Department of Economics in its journal Journal Of Economic Development.

Volume (Year): 32 (2007)
Issue (Month): 1 (June)
Pages: 1-20

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Handle: RePEc:jed:journl:v:32:y:2007:i:1:p:1-20

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Keywords: Infrastructures; Industry Performance; Portugal;

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References

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  1. Nadiri, M Ishaq & Mamuneas, Theofanis P, 1994. "The Effects of Public Infrastructure and R&D Capital on the Cost Structure and Performance of U.S. Manufacturing Industries," The Review of Economics and Statistics, MIT Press, vol. 76(1), pages 22-37, February.
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  4. Pereira, Alfredo M, 1998. "EU Structural Transfers and Economic Performance in Portugal," Public Finance = Finances publiques, , vol. 53(1), pages 53-77.
  5. Alfredo M. Pereira, 2000. "Is All Public Capital Created Equal?," The Review of Economics and Statistics, MIT Press, vol. 82(3), pages 513-518, August.
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  8. Alfredo M. Pereira & Jorge M. Andraz, 2003. "On the Impact of Public Investment On the Performance of U.S. Industries," Public Finance Review, , vol. 31(1), pages 66-90, January.
  9. Gaspar, Vitor & Pereira, Alfredo M., 1995. "The impact of financial integration and unilateral public transfers on investment and growth in EC capital-importing countries," Journal of Development Economics, Elsevier, vol. 48(1), pages 43-66, October.
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  12. Seitz, Helmut, 1994. "Public capital and the demand for private inputs," Journal of Public Economics, Elsevier, vol. 54(2), pages 287-307, June.
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  14. Alfredo M. Pereira & Jorge M. Andraz, 2005. "Public Investment in Transportation Infrastructure and Economic Performance in Portugal," Review of Development Economics, Wiley Blackwell, vol. 9(2), pages 177-196, 05.
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Citations

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Cited by:
  1. Silvia Vignetti & Emanuela Sirtori, 2010. "Infrastructure investment opportunities in the New EU Member States: the role of regional policies," Working Papers 201003, Centre for Industrial Studies (CSIL).
  2. Alfredo M. Pereira & Jorge M. Andraz, 2013. "On The Economic Effects Of Public Infrastructure Investment: A Survey Of The International Evidence," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 38(4), pages 1-37, December.
  3. Fenge, Robert & von Ehrlich, Maximilian & Wrede, Matthias, 2009. "Public input competition and agglomeration," Regional Science and Urban Economics, Elsevier, vol. 39(5), pages 621-631, September.
  4. Francesco Aiello & Alfonsina Iona & Leone Leonida, 2009. "Regional Infrastructure and Firm Investment. Theory and Empirical Evidence for Italy," Working Papers 639, Queen Mary, University of London, School of Economics and Finance.
  5. Alfredo M. Pereira & Jorge M. Andraz, 2012. "On The Economic Effects Of Investment In Railroad Infrastructures In Portugal," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 37(2), pages 79-107, June.

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