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Convergence across Spanish Regions: New Evidence on the Effects of Public Investment

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  • Gonzalez-Paramo, Jose Manuel

    (U Complutense de Madrid and Bank of Spain)

  • Martinez, Diego

    (U Jaen and Fundacion Centro de Estudios Andaluces)

Abstract

We examine the empirical relationship between public investment and per capita income growth in the Spanish regions over 1965-1997. Using a neoclassical growth model with public and human capital, a convergence equation is derived and estimated using panel data techniques. Besides providing evidence of conditional convergence, the results show a non-positive effect of productive-public investment on the rate of regional economic growth. The impact of public investment in education and health is not clear. Robustness checks addressing potential endogeneity and specification problems reaffirm our results. It is concluded that there are no simple recipes for effective regional investment policies.

Suggested Citation

  • Gonzalez-Paramo, Jose Manuel & Martinez, Diego, 2003. "Convergence across Spanish Regions: New Evidence on the Effects of Public Investment," The Review of Regional Studies, Southern Regional Science Association, vol. 33(2), pages 184-205.
  • Handle: RePEc:rre:publsh:v:33:y:2003:i:2:p:184-205
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Norman Baldwin & Stephen Borrelli, 2008. "Education and economic growth in the United States: cross-national applications for an intra-national path analysis," Policy Sciences, Springer;Society of Policy Sciences, vol. 41(3), pages 183-204, September.
    2. Miguel Gómez-Antonio & Bernard Fingleton, 2012. "Regional productivity variation and the impact of public capital stock: an analysis with spatial interaction, with reference to Spain," Applied Economics, Taylor & Francis Journals, vol. 44(28), pages 3665-3677, October.
    3. Santiago Lago-Peñas & Diego Martínez López, 2005. "Convergence and public investment: Regional policies revisited," Economic Working Papers at Centro de Estudios Andaluces E2005/05, Centro de Estudios Andaluces.
    4. D Martinez-Lopez, 2005. "Fiscal Policy and Growth: The Case of the Spanish Regions," Economic Issues Journal Articles, Economic Issues, vol. 10(1), pages 9-24, March.
    5. Márquez, Miguel A. & Ramajo, Julián & Hewings, Geoffrey J. D., 2011. "Public Capital and Regional Economic Growth: a SVAR Approach for the Spanish Regions," INVESTIGACIONES REGIONALES - Journal of REGIONAL RESEARCH, Asociación Española de Ciencia Regional, issue 21, pages 199-223.

    More about this item

    Keywords

    Education; Human Capital; Regional; Regions;

    JEL classification:

    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • R53 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Public Facility Location Analysis; Public Investment and Capital Stock
    • R58 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Regional Development Planning and Policy

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