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Productivity effects and determinants of public infrastructure investment

  • Fumitoshi Mizutani

    ()

  • Tomoyasu Tanaka

    ()

This study aims to investigate two important issues: whether or not public infrastructure contributes to production in the private sector, and whether or not political economy factors such as political situations, lobbying factors, and the availability of national grants for investment affect the allocation of public infrastructure investment. We estimate simultaneous equations by using a panel data set of 46 prefectures in Japan for 5 time periods from 1975 to 1990. From the empirical results, we conclude the following: (1) public capital contributes to productivity, (2) the investment behavior of the national government is efficiency-oriented for private productivity but equity-oriented for the capital stock level, (3) the complementarity of public capital investment between the national and the prefectural government could hold, (4) there is no clear political factor in the national government' s public investment function, and (5) the availability of national government grants for the construction of infrastructure boosts investment among prefectural governments.

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File URL: http://hdl.handle.net/10.1007/s00168-008-0279-y
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Article provided by Springer in its journal The Annals of Regional Science.

Volume (Year): 44 (2010)
Issue (Month): 3 (June)
Pages: 493-521

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Handle: RePEc:spr:anresc:v:44:y:2010:i:3:p:493-521
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  1. Wim P. M. Vijverberg & Chu-Ping C. Vijverberg & Janet L. Gamble, 1997. "Public Capital And Private Productivity," The Review of Economics and Statistics, MIT Press, vol. 79(2), pages 267-278, May.
  2. Forslund, Ulla M & Johansson, Borje, 1995. "Assessing Road Investments: Accessibility Changes, Cost Benefit and Production Effects," The Annals of Regional Science, Springer, vol. 29(2), pages 155-74, May.
  3. Garcia-Mila, Teresa & McGuire, Therese J., 1992. "The contribution of publicly provided inputs to states' economies," Regional Science and Urban Economics, Elsevier, vol. 22(2), pages 229-241, June.
  4. 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.
  5. Aschauer, David Alan, 1989. "Is public expenditure productive?," Journal of Monetary Economics, Elsevier, vol. 23(2), pages 177-200, March.
  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. Crain, W Mark & Oakley, Lisa K, 1995. "The Politics of Infrastructure," Journal of Law and Economics, University of Chicago Press, vol. 38(1), pages 1-17, April.
  8. Teresa Garcia-MilĂ  & 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.
  9. Morrison, Catherine J & Schwartz, Amy Ellen, 1996. "State Infrastructure and Productive Performance," American Economic Review, American Economic Association, vol. 86(5), pages 1095-1111, December.
  10. Kimiyoshi Kamada & Nobuhiro Okuno & Ritsuko Futagami, 1998. "Decisions on regional allocation of public investment: the case of Japan," Applied Economics Letters, Taylor & Francis Journals, vol. 5(8), pages 503-506.
  11. Lynde, Catherine & Richmond, James, 1992. "The Role of Public Capital in Production," The Review of Economics and Statistics, MIT Press, vol. 74(1), pages 37-44, February.
  12. Seitz, Helmut, 1995. "The Productivity and Supply of Urban Infrastructures," The Annals of Regional Science, Springer, vol. 29(2), pages 121-41, May.
  13. Norihiko Yamano & Toru Ohkawara, 2000. "The Regional Allocation of Public Investment: Efficiency or Equity?," Journal of Regional Science, Wiley Blackwell, vol. 40(2), pages 205-229.
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