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The Contribution of Transport and Human Capital Infrastructure to Local Private Production: A Partial Adjustment Approach

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Author Info
Andreas Stephan

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Abstract

This paper uses a partial adjustment approach to measure the contribution of public infrastructure to local private production. In the first step of the empirical analysis we apply a principal component analysis in order to construct 2 new infrastructure indicators from an array of 7 measures of transport and human capital infrastructure. In the second step the output of different sectors is regressed on private factor inputs and on these 2 infrastructure indicators. Our main finding is that expected long-run equilibrium output in an area of local government will be higher, the better it is endowed with both transport and human capital infrastructure. Moreover, transport and human capital infrastructure appear to be complementary, i.e. raising only transport infrastructure will not yield an increase in private production at the local level.

ZUSAMMENFASSUNG - (Der Beitrag von Verkehrs- und Humankapitalinfrastruktur zur lokalen privaten Produktion: Ein "partial adjustment" Ansatz)
Diese Studie verwendet einen "partial adjustment" Ansatz, um den Beitrag von öffentlicher Infrastruktur zur privaten Produktion auf der lokalen Ebene zu bestimmen. Im ersten Schritt der empirischen Analyse wird eine Hauptkomponentenanalyse durchgeführt, um 2 neue Infrastrukturindikatoren aus 7 Variablen für Verkehrs- und Humankapitalinfrastruktur zu bestimmen. Im zweiten Schritt wird der Output von verschiedenen Sektoren auf die privaten Faktorinputs sowie die 2 gefundenen Infrastrukturindikatoren regressiert. Das wichtigste empirische Ergebnis der Analyse ist, daß der erwartete langfristige Gleichgewichtsoutput in einem Kreis höher ist, je besser die Ausstattung sowohl mit Verkehrs- wie auch mit Humankapitalinfrastruktur ist. Weiterhin finden wir, daß Verkehrs- und Humankapitalinfrastruktur zueinander komplementär sind, d.h. falls nur die Ausstattung mit Verkehrsinfrastruktur verbessert würde, daraus keine Erhöhung der privaten lokalen Produktion resultiert.

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Paper provided by Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG) in its series CIG Working Papers with number FS IV 00-20.

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Length: 28 pages
Date of creation: Nov 2000
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Publication status: Published in Jahrbuch für Regionalwissenschaft/Review of Regional Research, Vol. 21(1), 2001, pp. 91-108.
Handle: RePEc:wzb:wzebiv:fsiv00-20

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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. Kelejian, Harry H. & Robinson, Dennis P., 1992. "Spatial autocorrelation : A new computationally simple test with an application to per capita county police expenditures," Regional Science and Urban Economics, Elsevier, vol. 22(3), pages 317-331, September. [Downloadable!] (restricted)
  2. Seitz, Helmut, 1995. "The Productivity and Supply of Urban Infrastructures," The Annals of Regional Science, Springer, vol. 29(2), pages 121-41, May.
  3. Munnell, Alicia H, 1992. "Infrastructure Investment and Economic Growth," Journal of Economic Perspectives, American Economic Association, vol. 6(4), pages 189-98, Fall. [Downloadable!] (restricted)
  4. Seitz, Helmut, 1994. "Public capital and the demand for private inputs," Journal of Public Economics, Elsevier, vol. 54(2), pages 287-307, June. [Downloadable!] (restricted)
  5. Aschauer, David Alan, 1989. "Is public expenditure productive?," Journal of Monetary Economics, Elsevier, vol. 23(2), pages 177-200, March. [Downloadable!] (restricted)
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  6. Seitz, Helmut, 1993. "A Dual Economic Analysis of the Benefits of the Public Road Network," The Annals of Regional Science, Springer, vol. 27(3), pages 223-39, September.
  7. White, Halbert, 1980. "A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity," Econometrica, Econometric Society, vol. 48(4), pages 817-38, May. [Downloadable!] (restricted)
  8. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July. [Downloadable!] (restricted)
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  1. Walter Buhr, 2003. "What is infrastructure?," Volkswirtschaftliche Diskussionsbeitraege 107-03, Universität Siegen, Fachbereich Wirtschaftswissenschaften, Wirtschaftsinformatik und Wirtschaftsrecht. [Downloadable!]
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