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The Impact of Road Infrastructure on Productivity and Growth: Some Preliminary Results for the German Manufacturing Sector

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  • Andreas Stephan

Abstract

Using time-series cross-section data from the manufacturing sector of the 11 Bundesländer from 1970 to 1993, we examine the impact of road infrastructure on private production applying three different approaches; i.e., a Cobb-Douglas production function, a translog production function and a growth accounting approach. Our econometric analysis explicitly takes into account four of the most frequent problems in the context of time-series cross-section analysis: serial correlation, groupwise heteroscedasticity, cross-sectional correlation and nonstationarity of data. For all approaches and tested specifications, we find that road infrastructure is significant for production in the manufacturing sector. Moreover, we find that variations between the Bundesländer are more important for explaining infrastructure's contribution to production than variations across years. ZUSAMMENFASSUNG - (Der Einfluß von Straßeninfrastruktur auf Wachstum und Produktivität: Einige vorläufige Ergebnisse für das produzierende Gewerbe in Deutschland) Das Arbeitspapier untersucht den Einfluß von Straßeninfrastruktur auf Produktivität und Wachstum im verarbeitenden Gewerbe in Deutschland für den Zeitraum 1970-1993. Den Hintergrund bildet die in der Literatur kontrovers diskutierte sogenannte Hypothese über das "Defizit an öffentlichem Kapital", wonach der seit Anfang der siebziger Jahren zu beobachtende allgemeine Rückgang des Produktivitätswachstum auf die in diesem Zeitraum ebenfalls zurückgegangenen öffentlichen Infrastrukturinvestitionen zurückgeführt werden kann. Die empirische Analyse wird mit einem Paneldatensatz auf Ebene der 11 westdeutschen Bundesländer durchgeführt. Zwei Wirkungsweisen von Infrastruktur auf die private Produktion werden unterschieden. Erstens können Firmen öffentliche Infrastruktur quasi wie ein kostenloses "Zwischenprodukt" für die Produktion nutzen. Zweitens kann Infrastruktur ähnlich wie technischer Fortschritt die Produktivität der privaten Produktionsfaktoren erhöhen. Im vorliegenden Papier werden beide Wirkungen von Infrastruktur erörtert. Im ersten Teil wird eine einfache Cobb-Douglas Produktionsfunktion geschätzt, in welcher Straßeninfrastruktur als ein Faktorinput in die Produktion eingeht. Es wird gezeigt, daß auf Basis der Cobb-Douglas Funktion die beiden Wirkungen von Infrastruktur empirisch nicht unterschieden werden können. Im zweiten Teil wird der Einfluß von Infrastruktur auf die Wachstumsrate der totalen Faktorproduktivität im verarbeitenden Gewerbe untersucht. Im dritten und abschließenden Teil wird mit einer Translog-Produktionsfunktion die Beziehung zwischen Infrastruktur und den privaten Inputfaktoren analysiert. Insgesamt zeigen die Ergebnisse eine starke Korrelation zwischen dem Produktivitätswachstum im verarbeitenden Gewerbe und der Straßeninfrastruktur. Allerdings ist diese Korrelation im Querschnittsvergleich der Bundesländer stärker ausgeprägt als innerhalb der einzelnen Zeitreihen. Die Hypothese über "das Defizit an öffentlichem Kapital" wird daher für das verarbeitende Gewerbe in Deutschland im Rahmen dieser Studie nicht bestätigt.

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Bibliographic Info

Paper provided by Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG) in its series CIG Working Papers with number FS IV 97-47.

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Length: 50 pages
Date of creation: Dec 1997
Date of revision:
Handle: RePEc:wzb:wzebiv:fsiv97-47

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Related research

Keywords: public infrastructure; manufacturing sector; total factor productivity growth; time-series cross-section data analysis;

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References

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  1. Baltagi, Badi H & Pinnoi, Nat, 1995. "Public Capital Stock and State Productivity Growth: Further Evidence from an Error Components Model," Empirical Economics, Springer, vol. 20(2), pages 351-59.
  2. Evans, Paul & Karras, Georgios, 1994. "Are Government Activities Productive? Evidence from a Panel of U.S. States," The Review of Economics and Statistics, MIT Press, vol. 76(1), pages 1-11, February.
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  4. Teresa Garcia-Milà & Therese J. McGuire & Robert H. Porter, 1993. "The effect of public capital in state-level production functions reconsidered," Economics Working Papers 36, Department of Economics and Business, Universitat Pompeu Fabra.
  5. Carlino, Gerald A. & Voith, Richard, 1992. "Accounting for differences in aggregate state productivity," Regional Science and Urban Economics, Elsevier, vol. 22(4), pages 597-617, November.
  6. Gramlich, Edward M, 1994. "Infrastructure Investment: A Review Essay," Journal of Economic Literature, American Economic Association, vol. 32(3), pages 1176-96, September.
  7. David Aschauer, 1988. "Is public expenditure productive?," Staff Memoranda 88-7, Federal Reserve Bank of Chicago.
  8. Erenburg, S. J. & Wohar, Mark E., 1995. "Public and private investment: Are there causal linkages?," Journal of Macroeconomics, Elsevier, vol. 17(1), pages 1-30.
  9. Granger, C. W. J., 1981. "Some properties of time series data and their use in econometric model specification," Journal of Econometrics, Elsevier, vol. 16(1), pages 121-130, May.
  10. David A. Aschauer, 1989. "Public investment and productivity growth in the Group of Seven," Economic Perspectives, Federal Reserve Bank of Chicago, issue Sep, pages 17-25.
  11. Bhargava, A & Franzini, L & Narendranathan, W, 1982. "Serial Correlation and the Fixed Effects Model," Review of Economic Studies, Wiley Blackwell, vol. 49(4), pages 533-49, October.
  12. Randall W. Eberts, 1990. "Public infrastructure and regional economic development," Economic Review, Federal Reserve Bank of Cleveland, issue Q I, pages 15-27.
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Cited by:
  1. Axel Schaffer & Jochen Siegele, 2008. "Regionale Potentiale – Bedeutung und Nutzung von Potentialfaktoren in den NUTS 3 Regionen Deutschlands und Österreichs," Jahrbuch für Regionalwissenschaft, Springer, vol. 28(2), pages 109-132, September.
  2. Stephanie Aubert & Andreas Stephan, 2000. "Regional Infrastructure Policy and its Impact on Productivity: A Comparison of Germany and France," CIG Working Papers FS IV 00-02, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG).
  3. Kolomak, E., 2011. "Efficiency of Infrastructure Capital in Russia," Journal of the New Economic Association, New Economic Association, issue 10, pages 74-93.
  4. Heinz Handler & Andreas Knabe & Bertrand Koebel & Margit Schratzenstaller & Sven Wehke, 2005. "The Impact of Public Budgets on Overall Productivity Growth," WIFO Working Papers 255, WIFO.

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