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Contribution to Productivity or Pork Barrel?: The Two Faces of Infrastructure Investment

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Author Info
Olivier Cadot
Lars-Hendrik Röller
Andreas Stephan

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Abstract

This paper proposes a simultaneous-equation approach to the estimation of the contribution of transport infrastructure accumulation to regional growth. We model explicitly the political-economy process driving infrastructure investments; in doing so, we eliminate a potential source of bias in production-function estimates and generate testable hypotheses on the forces that shape infrastructure policy. Our empirical findings on a panel of France's regions over 1985-92 suggest that electoral concerns and influence activities were, indeed, significant determinants of the cross-regional allocation of transportation infrastructure investments. By contrast, we find little evidence of concern for the maximization of economic returns to infrastructure spending, even after controlling for pork-barrel.

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Paper provided by DIW Berlin, German Institute for Economic Research in its series Discussion Papers of DIW Berlin with number 458.

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Length: 32 p.
Date of creation: 2004
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Publication status: Published in: Journal of Public Economics 90 (2006) 6-7
Handle: RePEc:diw:diwwpp:dp458

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Related research
Keywords: Growth; Infrastructure; Political economy; Lobbying; France;

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Find related papers by JEL classification:
D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Models of Political Processes: Rent-seeking, Elections, Legislatures, and Voting Behavior
D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy-Making and Implementation
O40 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Besley, Timothy & Coate, Stephen, 2001. "Lobbying and Welfare in a Representative Democracy," Review of Economic Studies, Blackwell Publishing, vol. 68(1), pages 67-82, January.
  2. Gian Maria Milesi-Ferretti & Roberto Perotti & Massimo Rostagno, 2002. "Electoral Systems And Public Spending," The Quarterly Journal of Economics, MIT Press, vol. 117(2), pages 609-657, May. [Downloadable!] (restricted)
    Other versions:
  3. Negishi, Takashi, 1973. "The excess of public expenditures on industries," Journal of Public Economics, Elsevier, vol. 2(3), pages 231-240, July. [Downloadable!] (restricted)
  4. Bernheim, B Douglas & Whinston, Michael D, 1986. "Common Agency," Econometrica, Econometric Society, vol. 54(4), pages 923-42, July. [Downloadable!] (restricted)
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    Other versions:
  6. Alicia H. Munnell & Leah M. Cook, 1990. "How does public infrastructure affect regional economic performance?," New England Economic Review, Federal Reserve Bank of Boston, issue Sep, pages 11-33.
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  7. David Alan Aschauer, 2000. "Do states optimize? Public capital and economic growth," The Annals of Regional Science, Springer, vol. 34(3), pages 343-363. [Downloadable!] (restricted)
    Other versions:
  8. Holtz-Eakin, Douglas, 1994. "Public-Sector Capital and the Productivity Puzzle," The Review of Economics and Statistics, MIT Press, vol. 76(1), pages 12-21, February. [Downloadable!] (restricted)
  9. Timothy Besley & Robin Burgess, 2000. "The Political Economy of Government Responsiveness: Theory and Evidence from India," STICERD - Development Economics Papers 28, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE. [Downloadable!]
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  10. Haughwout, Andrew F., 2002. "Public infrastructure investments, productivity and welfare in fixed geographic areas," Journal of Public Economics, Elsevier, vol. 83(3), pages 405-428, March. [Downloadable!] (restricted)
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  11. Martin, Philippe, 1999. "Public policies, regional inequalities and growth," Journal of Public Economics, Elsevier, vol. 73(1), pages 85-105, July. [Downloadable!] (restricted)
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  12. Grossman, Gene M & Helpman, Elhanan, 1994. "Protection for Sale," American Economic Review, American Economic Association, vol. 84(4), pages 833-50, September. [Downloadable!] (restricted)
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  13. White, Kenneth J, 1992. "The Durbin-Watson Test for Autocorrelation in Nonlinear Models," The Review of Economics and Statistics, MIT Press, vol. 74(2), pages 370-73, May. [Downloadable!] (restricted)
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  16. Torsten Persson & Guido Tabellini, 2002. "Political Economics: Explaining Economic Policy," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262661314.
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  18. Crain, W Mark & Oakley, Lisa K, 1995. "The Politics of Infrastructure," Journal of Law & Economics, University of Chicago Press, vol. 38(1), pages 1-17, April.
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  20. Blomquist, Sören & Christiansen, Vidar, 1998. "The Political Economy of Publicly Provided Private Goods," Working Paper Series 1998:14, Uppsala University, Department of Economics. [Downloadable!]
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  21. Combes, Pierre-Philippe & Lafourcade, Miren, 2001. "Transport Cost Decline and Regional Inequalities: Evidence from France," CEPR Discussion Papers 2894, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  23. Randall W. Eberts, 1990. "Public infrastructure and regional economic development," Economic Review, Federal Reserve Bank of Cleveland, issue Q I, pages 15-27. [Downloadable!]
  24. Gramlich, Edward M, 1994. "Infrastructure Investment: A Review Essay," Journal of Economic Literature, American Economic Association, vol. 32(3), pages 1176-96, September. [Downloadable!] (restricted)
  25. Alessandro Lizzeri & Nicola Persico, 2001. "The Provision of Public Goods under Alternative Electoral Incentives," American Economic Review, American Economic Association, vol. 91(1), pages 225-239, March. [Downloadable!] (restricted)
    Other versions:
  26. Dixit, Avinash & Grossman, Gene M & Helpman, Elhanan, 1997. "Common Agency and Coordination: General Theory and Application to Government Policy Making," Journal of Political Economy, University of Chicago Press, vol. 105(4), pages 752-69, August.
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Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Eduardo Engel & Ronald Fischer & Alexander Galetovic, 2009. "Soft Budgets and Renegotiations in Public-Private Partnerships," NBER Working Papers 15300, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  2. Kevin Milligan & Michael Smart, 2005. "Regional Grants as Pork Barrel Politics," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
  3. Straub, Stephane, 2008. "Infrastructure and development : a critical appraisal of the macro level literature," Policy Research Working Paper Series 4590, The World Bank. [Downloadable!]
    Other versions:
  4. Andrew Leigh, 2008. "Bringing Home the Bacon: An empirical analysis of the extent and effects of pork-barreling in Australian politics," CEPR Discussion Papers 580, Centre for Economic Policy Research, Research School of Social Sciences, Australian National University. [Downloadable!]
    Other versions:
  5. Marcelin Joanis, 2008. "The Road to Power: Partisan Loyalty and the Centralized Provision of Local Infrastructure," Cahiers de recherche 08-15, Departement d'Economique de la Faculte d'administration à l'Universite de Sherbrooke. [Downloadable!]
  6. Agenor, Pierre-Richard & Moreno-Dodson, Blanca, 2006. "Public infrastructure and growth : new channels and policy implications," Policy Research Working Paper Series 4064, The World Bank. [Downloadable!]
  7. Eduardo Engel & Ronald Fischer & Alexander Galetovic, 2009. "Soft budgets and Renegotiations in Public-Private Partnerships," Documentos de Trabajo 265, Centro de Economía Aplicada, Universidad de Chile. [Downloadable!]
  8. Picci, Lucio & Golden, Miriam, 2007. "Pork Barrel Politics in Postwar Italy, 1953–1994," MPRA Paper 5626, University Library of Munich, Germany. [Downloadable!]
    Other versions:
  9. Pellervo Hamalainen, 2009. "Review of literature on the productivity of public capital," Discussion Papers 55, Aboa Centre for Economics. [Downloadable!]
  10. Balazs Egert & Tomasz Kozluk & Douglas Sutherland, 2009. "Infrastructure and Growth: Empirical Evidence," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
    Other versions:
  11. Albert Solé-Ollé, 2009. "Inter-Regional redistribution through infrastructure investment: tactical or programmatic?," Working Papers 2009/32, Institut d'Economia de Barcelona (IEB). [Downloadable!]
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