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On The Economic Effects Of Investment In Railroad Infrastructures In Portugal

  • ALFREDO M. PEREIRA

    ()

    (The College of William and Mary)

  • JORGE M. ANDRAZ

    (Universidade do Algarve and CEFAGE(EU)- Center for Advanced Studies in Management and Economics)

The objective of this paper is to identify the effects of railroad infrastructure investment on aggregate and regional economic performance in Portugal. At the aggregate level, we show that railroad investment crowds in private investment and employment and have strong effects on output. At the regional level, we show that railroad investment affects private investment positively in all regions, employment in only Lisbon and the North, and output in all regions with the exception of Alentejo. The effects are regionally distributed in a rather uneven manner with Lisbon and the North capturing the bulk of the effects. Our results also highlight the relevance of regional spillovers. In terms of the relative effects of comparable railroad investment in the region and elsewhere in the country, we find that the North and the Center benefit more from investment elsewhere while the remaining regions benefit more from local investment. Finally, from a country-wide perspective, railroad investment located in Lisbon generates the largest marginal benefits, which reflect, mostly, the large effects in the Lisbon region itself. By contrast, railroad investment in the remaining regions has a much lower marginal benefit to the country, but these benefits reflect mostly spillovers. This highlights the difficulty in implementing policies that simultaneously maximize aggregate growth and reduce regional disparities.

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Article provided by Chung-Ang Unviersity, Department of Economics in its journal Journal Of Economic Development.

Volume (Year): 37 (2012)
Issue (Month): 2 (June)
Pages: 79-107

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Handle: RePEc:jed:journl:v:37:y:2012:i:2:p:79-107
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