Infrastructure and growth in the European Union: an empirical analysis at the regional level in a spatial framework
AbstractIn this paper we examine the return of public investment in the EU regions. We consider different forms of infrastructure capital by examining the relationship between a set of infrastructure indicators and economic performance at the NUTS2 level with an empirical model derived from the production-function approach. From a social planner’s perspective, we want to see which form of infrastructure investment has higher returns, considering structural differences in regions. The main contribution of this paper is to consider the impact of different types of infrastructure on growth, disaggregated at the regional level in the European Union, with an explicit focus on the New Member States, and correcting for spatial dependence and heterogeneity issues. We find that the highest rates of return are associated mainly with TLC, quality and accessibility of the region’s transportation network, while endowment of traditional road and railway infrastructure has a positive but slightly lower impact. We also contribute to the debate on convergence, finding that the β-convergence hypothesis holds also when the model encompasses several controls.
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Bibliographic InfoPaper provided by Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano in its series Departmental Working Papers with number 2008-37.
Date of creation: 21 Nov 2008
Date of revision:
Infrastructure capital; regional growth; convergence; spatial econometrics.;
Find related papers by JEL classification:
- H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
- O11 - Economic Development, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
- E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
- R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-06-17 (All new papers)
- NEP-EEC-2009-06-17 (European Economics)
- NEP-FDG-2009-06-17 (Financial Development & Growth)
- NEP-GEO-2009-06-17 (Economic Geography)
- NEP-PBE-2009-06-17 (Public Economics)
- NEP-URE-2009-06-17 (Urban & Real Estate Economics)
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