Beyond the efficiency†equity dilemma: Centralization as a determinant of government investment in infrastructure**This research has received financial support from the Spanish Ministry of Science and Innovation (ECO2009†06946/ECON), and the Autonomous Government of Catalonia (SGR2009†1066). Germà Bel thanks support from ICREA†Academia. We have benefited from useful comments by participants in the 2011 ERSA Conference, Albert Solé†Ollé, and three anonymous reviewers

Considerable attention has been given to the efficiency†equity dilemma in explaining the territorial allocation of investment. However, centralization policies that seek to introduce or reinforce territorial hierarchies have yet to be subject to empirical analysis. Drawing on data from Spain, we show that investment in network modes is influenced by strategies of directing funding to the regions immediately surrounding the political capital. These policies of centralization, which complement factors of efficiency†equity trade†off and the satisfaction of political partisan interests, have been facilitated in the case of roads and railways by budgetary funding models in which mobility demands have not been the main driver of investment allocation.