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Determinants of public expenditure on infrastructure : transportation and communication

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Author Info

  • Randolph, Susan
  • Bogetic, Zeljko
  • Hefley, Dennis

Abstract

The authors empirically study factors that influence public investment in transportation and communication infrastructure. Using data for 1980-86 for 27 economies, they assess the influence of government objectives, the nature of the domestic economy, and the external assistance flow on public infrastructure spending. They find: a) per capita spending on infrastructure responds most strongly to changes in development level, urbanization rate, and labor force participation rate; b) spending is greater in countries with large foreign sectors and is positively influenced by sectoral imbalances between rural and urban areas; c) if total foreign savings flows increase, there is a small positive per capita spending response; d) with higher population densities, consolidated government spending declines although it rises initially; e) central budget spending is positively associated with improved institutional development, while consolidated budget is negatively associated; f) budget deficit size appears not to influence central budget spending but is positively associated with consolidated budget spending; g) greater outward orientation is positively associated with increased consolidated budget spending but seems to bear no relationship to central budget spending on infrastructure; and h) governments that are either not at all or extremely committed to alleviating poverty spend less on infrastructure. Governments with a limited commitment to poverty alleviation adopt strategies to increase the poor's productivity by investing in infrastructure. As the commitment intensifies, their strategy shifts to improving human capital or strengthening the social safety net, and funding for those social programs competes with funding for developing infrastructure.

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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 1661.

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Date of creation: 31 Oct 1996
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Handle: RePEc:wbk:wbrwps:1661

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Keywords: Public Sector Economics&Finance; Economic Theory&Research; Banks&Banking Reform; Environmental Economics&Policies; Decentralization; Banks&Banking Reform; Agricultural Research; Environmental Economics&Policies; Public Sector Economics&Finance; Economic Theory&Research;

References

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  1. Aschauer, David Alan, 1989. "Is public expenditure productive?," Journal of Monetary Economics, Elsevier, vol. 23(2), pages 177-200, March.
  2. Leff, Nathaniel H, 1984. "Externalities, Information Costs, and Social Benefit-Cost Analysis for Economic Development: An Example from Telecommunications," Economic Development and Cultural Change, University of Chicago Press, vol. 32(2), pages 255-76, January.
  3. Kessides, C., 1993. "The Contributions of Infrastructure to Economic Development, A review of Experience and Policy Implications," World Bank - Discussion Papers 213, World Bank.
  4. Baffes, John & Shah, Anwar, 1998. "Productivity of Public Spending, Sectoral Allocation Choices, and Economic Growth," Economic Development and Cultural Change, University of Chicago Press, vol. 46(2), pages 291-303, January.
  5. Joshua Greene & Delano Villanueva, 1991. "Private Investment in Developing Countries: An Empirical Analysis," IMF Staff Papers, Palgrave Macmillan, vol. 38(1), pages 33-58, March.
  6. Chen, Shaohua & Datt, Gaurav & Ravallion, Martin, 1994. "Is Poverty Increasing in the Developing World?," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 40(4), pages 359-76, December.
  7. Musalem, Alberto R., 1989. "Private investment in Mexico : an empirical analysis," Policy Research Working Paper Series 183, The World Bank.
  8. Khan, Haider Ali & Hoshino, Eiichi, 1992. "Impact of foreign aid on the fiscal behavior of LDC governments," World Development, Elsevier, vol. 20(10), pages 1481-1488, October.
  9. Cardoso, Eliana, 1993. "Private Investment in Latin America," Economic Development and Cultural Change, University of Chicago Press, vol. 41(4), pages 833-48, July.
  10. Shantayanan Devarajan & Vinaya Swaroop & Heng-fu Zou, 1993. "What do governments buy?," CEMA Working Papers 513, China Economics and Management Academy, Central University of Finance and Economics.
  11. David A. Aschauer, 1990. "Highway capacity and economic growth," Economic Perspectives, Federal Reserve Bank of Chicago, issue Sep, pages 14-24.
  12. Kessides, C., 1993. "Institutional Options for Provision of Infrastructure," World Bank - Discussion Papers 212, World Bank.
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Citations

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Cited by:
  1. Julian Ramajo & Javier Salinas & Francisco Pedraja & Miguel Márquez, 2007. "Competition in the allocation of public spending: a new model to analyse the interaction between expenditure categories," Economics Bulletin, AccessEcon, vol. 8(4), pages 1-7.
  2. Saiz, Albert, 2006. "Dictatorships and highways," Regional Science and Urban Economics, Elsevier, vol. 36(2), pages 187-206, March.
  3. Vergne, Clémence, 2009. "Democracy, elections and allocation of public expenditures in developing countries," European Journal of Political Economy, Elsevier, vol. 25(1), pages 63-77, March.
  4. Zeljko Bogetic & Johannes Fedderke, 2005. "Infrastructure and Growth in South Africa: Benchmarking, Productivity and Investment Needs, paper presented at Economic Society of South Africa (ESSA) Conference, Durban, 9/7-9/2005," Public Economics 0510006, EconWPA.
  5. Escobal, Javier, 2005. "The Role of Public Infraestructure in Market Development in Rural Peru," MPRA Paper 727, University Library of Munich, Germany.
  6. Ismael Sanz & Francisco Javier Velázquez, 2002. "Determinants of the Composition of Government Expenditure by Functions," European Economy Group Working Papers 13, European Economy Group.
  7. Juan González Alegre, 2012. "An evaluation of EU regional policy. Do structural actions crowd out public spending?," Public Choice, Springer, vol. 151(1), pages 1-21, April.
  8. Gebremeskel Gebremariam & Tesfa Gebremedhin & Peter Schaeffer, 2012. "County-level determinants of local public services in Appalachia: a multivariate spatial autoregressive model approach," The Annals of Regional Science, Springer, vol. 49(1), pages 175-190, August.
  9. Kohei Daido & Ken Tabata, 2012. "Public Infrastructures, Production Organizations, and Economic Development," Discussion Paper Series 93, School of Economics, Kwansei Gakuin University, revised Aug 2012.
  10. Fedderke, J.W. & Bogetic, Z., 2009. "Infrastructure and Growth in South Africa: Direct and Indirect Productivity Impacts of 19 Infrastructure Measures," World Development, Elsevier, vol. 37(9), pages 1522-1539, September.
  11. Bogetic, Zeljko & Fedderke, Johannes W., 2006. "Forecasting investment needs in South Africa's electricity and telecommunications sectors," Policy Research Working Paper Series 3829, The World Bank.
  12. Esfahani, Hadi Salehi & Ramirez, Maria Teresa, 2003. "Institutions, infrastructure, and economic growth," Journal of Development Economics, Elsevier, vol. 70(2), pages 443-477, April.
  13. repec:ebl:ecbull:v:8:y:2007:i:4:p:1-7 is not listed on IDEAS
  14. Albert Saiz, 2002. "Democracy to the road: the political economy of potholes," Working Papers 02-17, Federal Reserve Bank of Philadelphia.
  15. Zeljko Bogetic & Issa Sanogo, 2005. "Infrastructure, Productivity and Urban Dynamics in Cote d'Ivoire, Africa Region Working Paper Series No. 86 (July 2005), The World Bank, Washington D.C," Urban/Regional 0510001, EconWPA.
  16. Sanz, Ismael & Velazquez, Francisco J, 2003. "What do OECD countries cut first at a time of fiscal adjustments? A dynamic panel data approach," University of California at Santa Barbara, Economics Working Paper Series qt4j744960, Department of Economics, UC Santa Barbara.
  17. Pedro Gomes & Francois Pouget, 2008. "Corporate tax competition and public capital stock," LSE Research Online Documents on Economics 6536, London School of Economics and Political Science, LSE Library.
  18. Gomes, Pedro & Pouget, Francois, 2008. "Corporate tax competition and the decline of public investment," Working Paper Series 0928, European Central Bank.

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