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Productivity effects and determinants of public infrastructure investment

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  • Fumitoshi Mizutani
  • Tomoyasu Tanaka

Abstract

This study aims to investigate two important issues: whether or not public infrastructure contributes to production in the private sector, and whether or not political economy factors such as political situations, lobbying factors, and the availability of national grants for investment affect the allocation of public infrastructure investment. We estimate simultaneous equations by using a panel data set of 46 prefectures in Japan for 5 time periods from 1975 to 1990. From the empirical results, we conclude the following: (1) public capital contributes to productivity, (2) the investment behavior of the national government is efficiency-oriented for private productivity but equity-oriented for the capital stock level, (3) the complementarity of public capital investment between the national and the prefectural government could hold, (4) there is no clear political factor in the national government' s public investment function, and (5) the availability of national government grants for the construction of infrastructure boosts investment among prefectural governments.
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  • Fumitoshi Mizutani & Tomoyasu Tanaka, 2010. "Productivity effects and determinants of public infrastructure investment," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 44(3), pages 493-521, June.
    • Handle: RePEc:spr:anresc:v:44:y:2010:i:3:p:493-521
    DOI: 10.1007/s00168-008-0279-y
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    3. Miyazaki, Tomomi, 2013. "Fiscal Policy and Regional Business Cycle Fluctuations in Japan," Discussion Paper Series 583, Institute of Economic Research, Hitotsubashi University.
    4. Jussila Hammes, Johanna, 2015. "Political economics or Keynesian demand-side policies: What determines transport infrastructure investment in Swedish municipalities?," Research in Transportation Economics, Elsevier, vol. 51(C), pages 49-60.
    5. Mohanty, Biswajit & Bhanumurthy, N. R. & Dastidar, Ananya Ghosh, 2017. "What explains Regional Imbalances in Infrastructure?: Evidence from Indian States," Working Papers 17/197, National Institute of Public Finance and Policy.
    6. Tomomi Miyazaki & Haruo Kondoh, 2017. "Local Public Investment and Regional Business Cycle Fluctuations in Japan," Economics Bulletin, AccessEcon, vol. 37(1), pages 402-410.
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    8. Víctor Adame & Javier Alonso & Luisa Pérez & David Tuesta, 2017. "Infrastructure & economic growth from a meta-analysis approach: do all roads lead to Rome?," Working Papers 17/07, BBVA Bank, Economic Research Department.
    9. Mitsuhiko Kataoka & Kodrat Wibowo, 2014. "Decentralization and Spatial Allocation Policy of Public Investment in Indonesia and Japan," Working Papers in Economics and Development Studies (WoPEDS) 201403, Department of Economics, Padjadjaran University, revised Feb 2014.
    10. Vicente German-Soto & Luis Gutierrez Flores & Hector Alonso Barajas Bustillos, 2017. "An analysis of the relationship between infrastructure investment and economic growth in Mexican urban areas, 1985-2008," Economics Bulletin, AccessEcon, vol. 37(4), pages 2422-2433.
    11. Mitsuhiko Kataoka, 2014. "Trends in the regional allocation of public investment in the post-bubble Japanese economy," Letters in Spatial and Resource Sciences, Springer, vol. 7(3), pages 205-212, October.
    12. Juanfeng Zhang & Danxia Zhang & Lele Li & Hui Zeng, 2020. "Regional impact and spillover effect of public infrastructure investment: An empirical study in the Yangtze River Delta, China," Growth and Change, Wiley Blackwell, vol. 51(4), pages 1749-1765, December.
    13. Celbis, M.G. & Crombrugghe, D. de & Muysken, J., 2014. "Public investment and regional politics: The case of Turkey," MERIT Working Papers 2014-020, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).

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    More about this item

    Keywords

    H50; H54; R53;
    All these keywords.

    JEL classification:

    • H50 - Public Economics - - National Government Expenditures and Related Policies - - - General
    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
    • R53 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Public Facility Location Analysis; Public Investment and Capital Stock

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