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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.

ZUSAMMENFASSUNG - (Beitrag zur Produktivität oder Pork-barrel? Die zwei Seiten von Infrastrukturinvestitionen)
In dieser Untersuchung wird ein simultanes Gleichungssystem zur Schätzung des Beitrags von Verkehrsinfrastrukturinvestitionen zu regionalem Wachstum verwendet. Es wird explizit der politische Prozeß modelliert, der Infrastrukturinvestitionen determiniert; dadurch wird eine mögliche Ursache einer verzerrten Parameterschätzung vermieden, die eintreten kann, wenn Produktionsfunktionen einzeln geschätzt werden. Gleichzeitig fließen in das Modell weitere empirisch überprüfbare Hypothesen über die Determinanten von Infrastrukturpolitik ein. Die empirischen Ergebnisse für einen Paneldatensatz mit 21 französischen Regionen im Zeitraum 1985-1991 zeigen, daß unterstützende Aktivitäten in der Tat einen signifikanten Einfluß auf die regionale Allokation von Verkehrsinfrastrukturinvestitionen haben. Darüber hinaus werden nur wenig empirische Hinweise dafür gefunden, daß auch erwartete Produktivitätseffekte von Infrastruktur bei der regionalen Allokation in Frankreich von Bedeutung sind.

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Publisher Info
Paper provided by Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG) in its series CIG Working Papers with number FS IV 02-09.

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Length: 47 pages
Date of creation: May 2002
Date of revision:
Publication status: Published in the Journal of Public Economics, Vol. 90(6-7), Aug. 2006, pages 1133-1153.
Handle: RePEc:wzb:wzebiv:fsiv02-09

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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

References listed on IDEAS
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    Other versions:
  2. 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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  4. 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)
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  6. 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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  22. 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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  24. Martin, Philippe & Rogers, Carol Ann, 1995. "Industrial location and public infrastructure," Journal of International Economics, Elsevier, vol. 39(3-4), pages 335-351, November. [Downloadable!] (restricted)
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  25. 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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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. 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!]
  2. 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:
  3. 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:
  4. 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!]
  5. Picci, Lucio & Golden, Miriam, 2007. "Pork Barrel Politics in Postwar Italy, 1953–1994," MPRA Paper 5626, University Library of Munich, Germany. [Downloadable!]
    Other versions:
  6. 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:
  7. Kevin Milligan & Michael Smart, 2005. "Regional Grants as Pork Barrel Politics," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
  8. 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:
  9. 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!]
  10. Pellervo Hamalainen, 2009. "Review of literature on the productivity of public capital," Discussion Papers 55, Aboa Centre for Economics. [Downloadable!]
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