IDEAS home Printed from https://ideas.repec.org/b/ces/ifodrs/72.html
   My bibliography  Save this book

Public Investments in Infrastructure: Development, Causal Factors and Growth Effects

Author

Listed:
  • Alexander Eck
  • Joachim Ragnitz
  • Simone Scharfe
  • Christian Thater
  • Bernhard Wieland

Abstract

Study commissioned by the Federal Ministry of Economics and Technology The Ifo institute, Dresden branch has been commissioned by the Federal Ministry of Economics and Technology to conduct an analysis concerning public infrastructure investments in Germany in cooperation with Prof. Bernhard Wieland. The goal was to explain the ongoing drop in (public) infrastructure investments. The focus lies on answering the question whether this is a "quasi-natural" development in a developed economy, or whether specific factors in Germany cause the low level of infrastructure investments. The study is based on an analysis of the growth effects of infrastructure investments. Apparently, growth effects are often overestimated. The causes for the decline in infrastructure investments in Germany are identified by ten hypotheses. It is partly due to reasons that do not require direct political action, as "saturation". In addition, outsourcing from public budgets that cannot be captured by statistics anymore, as well as changed fiscal and macroeconomic conditions are major causes. From the assessment of the ten hypothesis, political needs for action are derived. These contain administrative simplification of the investment processes, improved municipal budgets and an intensified use of fee-funding to manage capacity utilization.

Suggested Citation

  • Alexander Eck & Joachim Ragnitz & Simone Scharfe & Christian Thater & Bernhard Wieland, 2015. "Public Investments in Infrastructure: Development, Causal Factors and Growth Effects," ifo Dresden Studien, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, number 72.
  • Handle: RePEc:ces:ifodrs:72
    as

    Download full text from publisher

    File URL: https://www.ifo.de/DocDL/ifo_Dresden_Studien_72.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Ingrid Ott & Stephen J. Turnovsky, 2006. "Excludable and Non‐excludable Public Inputs: Consequences for Economic Growth," Economica, London School of Economics and Political Science, vol. 73(292), pages 725-748, November.
    2. Canning, David & Bennathan, Esra, 2000. "The social rate of return on infrastructure investments," Policy Research Working Paper Series 2390, The World Bank.
    3. Everaert, Gerdie & Heylen, Freddy, 2004. "Public capital and long-term labour market performance in Belgium," Journal of Policy Modeling, Elsevier, vol. 26(1), pages 95-112, January.
    4. Pereira, Alfredo M & Sagales, Oriol Roca, 1999. "Public Capital Formation and Regional Development in Spain," Review of Development Economics, Wiley Blackwell, vol. 3(3), pages 281-294, October.
    5. Aschauer, David Alan, 1989. "Does public capital crowd out private capital?," Journal of Monetary Economics, Elsevier, vol. 24(2), pages 171-188, September.
    6. Daniel Montolio & Albert Solé‐Ollé, 2009. "Road investment and regional productivity growth: the effects of vehicle intensity and congestion," Papers in Regional Science, Wiley Blackwell, vol. 88(1), pages 99-118, March.
    7. Bröcker, Johannes & Korzhenevych, Artem & Schürmann, Carsten, 2010. "Assessing spatial equity and efficiency impacts of transport infrastructure projects," Transportation Research Part B: Methodological, Elsevier, vol. 44(7), pages 795-811, August.
    8. Delorme, Charles Jr. & Thompson, Herbert Jr. & Warren, Ronald Jr., 1999. "Public Infrastructure and Private Productivity: A Stochastic-Frontier Approach," Journal of Macroeconomics, Elsevier, vol. 21(3), pages 563-576, July.
    9. Aschauer, David Alan, 1989. "Is public expenditure productive?," Journal of Monetary Economics, Elsevier, vol. 23(2), pages 177-200, March.
    10. Gramlich, Edward M, 1994. "Infrastructure Investment: A Review Essay," Journal of Economic Literature, American Economic Association, vol. 32(3), pages 1176-1196, September.
    11. John A. Tatom, 1991. "Public capital and private sector performance," Review, Federal Reserve Bank of St. Louis, issue May, pages 3-15.
    12. Michael Kloß & Robert Lehmann & Joachim Ragnitz & Gerhard Untiedt, 2012. "Declining transfer payments on the economic performance in Eastern Germany," ifo Dresden Studien, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, number 63, October.
    13. Robert M. Solow, 1956. "A Contribution to the Theory of Economic Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 70(1), pages 65-94.
    14. Melo, Patricia C. & Graham, Daniel J. & Brage-Ardao, Ruben, 2013. "The productivity of transport infrastructure investment: A meta-analysis of empirical evidence," Regional Science and Urban Economics, Elsevier, vol. 43(5), pages 695-706.
    15. Kemmerling , Achim & Stephan, Andreas, 2008. "The politico-economic determinants and productivity effects of regional transport investment in Europe," EIB Papers 7/2008, European Investment Bank, Economics Department.
    16. Robert J. Barro & Xavier Sala-I-Martin, 1992. "Public Finance in Models of Economic Growth," Review of Economic Studies, Oxford University Press, vol. 59(4), pages 645-661.
    17. Ward Romp & Jakob De Haan, 2007. "Public Capital and Economic Growth: A Critical Survey," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 8(S1), pages 6-52, April.
    18. Charlot, Sylvie & Schmitt, Bertrand, 1999. "Public Infrastructure and Economic Growth in France's Regions," ERSA conference papers ersa99pa142, European Regional Science Association.
    19. Pereira, Alfredo Marvao & Roca-Sagales, Oriol, 2003. "Spillover effects of public capital formation: evidence from the Spanish regions," Journal of Urban Economics, Elsevier, vol. 53(2), pages 238-256, March.
    20. José M. Albala‐Bertrand & Emmanuel C. Mamatzakis, 2004. "The Impact of Public Infrastructure on the Productivity of the Chilean Economy," Review of Development Economics, Wiley Blackwell, vol. 8(2), pages 266-278, May.
    21. Cadot, Olivier & Röller, Lars-Hendrik & Stephan, Andreas, 1999. "A Political Economy Model of Infrastructure Allocation: An Empirical Assessment," CEPR Discussion Papers 2336, C.E.P.R. Discussion Papers.
    22. Barro, Robert J, 1990. "Government Spending in a Simple Model of Endogenous Growth," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 103-126, October.
    23. Kappeler, Andreas & Nemoz, Mathieu, 2010. "Public-Private Partnerships in Europe - Before and During the Recent Financial Crisis," Economic and Financial Reports 2010/4, European Investment Bank, Economics Department.
    24. John G. Fernald, 1999. "Roads to Prosperity? Assessing the Link between Public Capital and Productivity," American Economic Review, American Economic Association, vol. 89(3), pages 619-638, June.
    25. Erik Verhoef, 1996. "The Economics of Regulating Road Transport," Books, Edward Elgar Publishing, number 939.
    26. Christophe Kamps, 2006. "New Estimates of Government Net Capital Stocks for 22 OECD Countries, 1960-2001," IMF Staff Papers, Palgrave Macmillan, vol. 53(1), pages 1-6.
    27. Lakshmanan, T.R., 2011. "The broader economic consequences of transport infrastructure investments," Journal of Transport Geography, Elsevier, vol. 19(1), pages 1-12.
    28. Pereira, Alfred M. & Roca-Sagales, Oriol, 2001. "Infrastructures and private sector performance in Spain," Journal of Policy Modeling, Elsevier, vol. 23(4), pages 371-384, May.
    29. Robert J. Barro & Xavier Sala-i-Martin, 2003. "Economic Growth, 2nd Edition," MIT Press Books, The MIT Press, edition 2, volume 1, number 0262025531, December.
    30. Michael Roos, 2003. "Internationale Integration und die Neue Ökonomische Geographie," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 4(1), pages 107-121, February.
    31. Piyapong Jiwattanakulpaisarn & Robert B. Noland & Daniel J. Graham, 2012. "Marginal Productivity of Expanding Highway Capacity," Journal of Transport Economics and Policy, University of Bath, vol. 46(3), pages 333-347, September.
    32. Sturm, Jan Egbert & de Haan, Jakob, 1995. "Is public expenditure really productive?: New evidence for the USA and The Netherlands," Economic Modelling, Elsevier, vol. 12(1), pages 60-72, January.
    33. T. W. Swan, 1956. "ECONOMIC GROWTH and CAPITAL ACCUMULATION," The Economic Record, The Economic Society of Australia, vol. 32(2), pages 334-361, November.
    34. Kamps, Christophe, 2005. "Is there a lack of public capital in the European Union?," EIB Papers 3/2005, European Investment Bank, Economics Department.
    35. J.Peter Neary, 2001. "Of Hype and Hyperbolas: Introducing the New Economic Geography," Journal of Economic Literature, American Economic Association, vol. 39(2), pages 536-561, June.
    36. Blum, Ulrich & Ragnitz, Joachim & Freye, Sabine & Scharfe, Simone & Schneider, Lutz, 2009. "Regionalisierung öffentlicher Ausgaben und Einnahmen: Eine Untersuchung am Beispiel der Neuen Länder," IWH-Sonderhefte 4/2009, Halle Institute for Economic Research (IWH).
    37. Kenneth Button, 2010. "Transport Economics, 3rd Edition," Books, Edward Elgar Publishing, number 1863.
    38. David Hummels, 2007. "Transportation Costs and International Trade in the Second Era of Globalization," Journal of Economic Perspectives, American Economic Association, vol. 21(3), pages 131-154, Summer.
    39. Hans-Werner Sinn, 2010. "Euro Crisis: The Significance of the Euro Rescue Plan for Germany and Europe," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 63(10), pages 03-09, May.
    40. Kemmerling, Achim & Stephan, Andreas, 2002. "The Contribution of Local Public Infrastructure to Private Productivity and Its Political Economy: Evidence from a Panel of Large German Cities," Public Choice, Springer, vol. 113(3-4), pages 403-424, December.
    41. Stefan Bach & Guido Baldi & Kerstin Bernoth & Björn Bremer & Beatrice Farkas & Ferdinand Fichtner & Marcel Fratzscher & Martin Gornig, 2013. "Wege zu einem höheren Wachstumspfad," DIW Wochenbericht, DIW Berlin, German Institute for Economic Research, vol. 80(26), pages 6-17.
    42. U. Blum, 1982. "Effects Of Transportation Investments On Regional Growth: A Theoretical And Empirical Investigation," Papers in Regional Science, Wiley Blackwell, vol. 49(1), pages 169-184, January.
    43. Schiffbauer, Marc, 2007. "Calling for innovations - infrastructure and sources of growth," Papers DYNREG18, Economic and Social Research Institute (ESRI).
    44. Austrian Institute of Economic Research, 2006. "Competitiveness Report 2006," WIFO Studies, WIFO, number 28814, January.
    45. Alfredo M. Pereira & Jorge M. Andraz, 2005. "Public Investment in Transportation Infrastructure and Economic Performance in Portugal," Review of Development Economics, Wiley Blackwell, vol. 9(2), pages 177-196, May.
    46. Uwe Kunert & Heike Link, 2013. "Verkehrsinfrastruktur: Substanzerhaltung erfordert deutlich höhere Investitionen," DIW Wochenbericht, DIW Berlin, German Institute for Economic Research, vol. 80(26), pages 32-38.
    47. Remy Prud'homme & Chang-Woon Lee, 1999. "Size, Sprawl, Speed and the Efficiency of Cities," Urban Studies, Urban Studies Journal Limited, vol. 36(11), pages 1849-1858, October.
    48. Komar, Walter & Ragnitz, Joachim, 2002. "Effekte eines beschleunigten Ausbaus der Verkehrsinfrastruktur in Ostdeutschland – Das Beispiel der A 72 Chemnitz-Leipzig," Wirtschaft im Wandel, Halle Institute for Economic Research (IWH), vol. 8(12), pages 360-365.
    49. Pereira, Alfredo Marvao & Roca-Sagales, Oriol, 2003. "Erratum to "Spillover effects of public capital formation: evidence from the Spanish regions": [Journal of Urban Economics 53 (2003) 238-256]," Journal of Urban Economics, Elsevier, vol. 54(1), pages 197-197, July.
    50. David Alan Aschauer, 1989. "Back of the G-7 pack: public investment and productivity growth in the Group of Seven," Working Paper Series, Macroeconomic Issues 89-13, Federal Reserve Bank of Chicago.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Hüther, Michael, 2019. "10 Jahre Schuldenbremse: Ein Konzept mit Zukunft?," IW policy papers 3/2019, Institut der deutschen Wirtschaft (IW) / German Economic Institute.
    2. Hüther Michael & Südekum Jens, 2019. "Die Schuldenbremse – eine falsche Fiskalregel am falschen Platz," Perspektiven der Wirtschaftspolitik, De Gruyter, vol. 20(4), pages 284-291, December.
    3. Alexander Eck & Sabine Gralka & Julia Sonnenburg & Wolfgang Nagl & Joachim Ragnitz, 2015. "Hochschulfinanzierung in Mecklenburg-Vorpommern," ifo Dresden Studien, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, number 75.
    4. Wolfgang Nierhaus & Timo Wollmershäuser, 2016. "ifo Konjunkturumfragen und Konjunkturanalyse: Band II," ifo Forschungsberichte, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, number 72, March.
    5. Achim Truger, 2015. "Implementing the golden rule for public investment in Europe," Working Paper Reihe der AK Wien - Materialien zu Wirtschaft und Gesellschaft 138, Kammer für Arbeiter und Angestellte für Wien, Abteilung Wirtschaftswissenschaft und Statistik.
    6. Arno Städtler, 2018. "Weaker Automotive Business Dampens Leasing Growth - Capital Investments Stay on Track for Growth," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 71(23), pages 36-46, December.
    7. Arno Städtler, 2013. "Investments Continue to Decline in 2013 – Leasing Business Stagnates, 2014: Growth in Sight," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 66(23), pages 68-78, December.
    8. Clemens Fuest & Klaus Gründler & Niklas Potrafke & Marcel Fratzscher & Alexander Kriwoluzky & Claus Michelsen & Michael Hüther & Peter Bofinger & Lars P. Feld & Wolf Heinrich Reuter, 2019. "Schuldenbremse — Investitionshemmnis oder Vorbild für Europa? [Debt Brake — Investment Barrier or Role Model for Europe?]," Wirtschaftsdienst, Springer;ZBW - Leibniz Information Centre for Economics, vol. 99(5), pages 307-329, May.
    9. Arno Städtler, 2014. "Leasing Growth in 2014 Far Exceeds Capital Investment – Moderate Optimism for 2015," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 67(23), pages 53-63, December.
    10. David Bauer & Joachim Ragnitz & Christian Ochsner, 2018. "Strategies for the Best Equipment and Use of Funds after 2020," ifo Dresden Studien, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, number 82.
    11. Thomas Strobel, 2015. "Weak Investment and the Tertiarisation of Germany’s Economic Structure," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 68(01), pages 43-49, January.
    12. Arno Städtler, 2017. "Leasing and Asset Investments Stay on Track for Growth – Excellent Outlook for 2018 25," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 70(23), pages 25-34, December.
    13. Alexander Eck & Joachim Ragnitz & Simone Scharfe & Christian Thater & Bernhard Wieland, 2014. "Straßen marode, Brücken gesperrt: Eine Bestandsaufnahme zum Thema öffentliche Infrastrukturinvestitionen in Deutschland," ifo Dresden berichtet, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 21(02), pages 15-24, April.
    14. Isabel Hanisch & Elisabeth Wieland & Timo Wollmershäuser, 2015. "The Development of German Investment Activity in a European Comparison – the Role of Price and Volume Effects," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 68(16), pages 39-50, August.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ward Romp & Jakob De Haan, 2007. "Public Capital and Economic Growth: A Critical Survey," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 8(S1), pages 6-52, April.
    2. Alfredo M. Pereira & Jorge M. Andraz, 2013. "On The Economic Effects Of Public Infrastructure Investment: A Survey Of The International Evidence," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 38(4), pages 1-37, December.
    3. Valter Di Giacinto & Giacinto Micucci & Pasqualino Montanaro, 2012. "The Macroeconomic Impact of Infrastructures: A Literature Review and Empirical Analysis on the Case of Italy," QA - Rivista dell'Associazione Rossi-Doria, Associazione Rossi Doria, issue 1, March.
    4. Holmgren, Johan & Merkel, Axel, 2017. "Much ado about nothing? – A meta-analysis of the relationship between infrastructure and economic growth," Research in Transportation Economics, Elsevier, vol. 63(C), pages 13-26.
    5. Federici, Andrea, 2018. "Il rapporto tra capitale pubblico e altre variabili macroeconomiche: analisi della letteratura [The relationship between public capital and other macroeconomic variable: a literature review]," MPRA Paper 88515, University Library of Munich, Germany.
    6. Silvia Bertarelli, 2006. "Public capital and growth," Politica economica, Società editrice il Mulino, issue 3, pages 361-398.
    7. Pedro R.D. Bom & Jenny E. Ligthart, 2009. "How Productive is Public Capital? A Meta-Regression Analysis," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0912, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    8. Andrés Rodríguez-Pose & Yannis Psycharis & Vassilis Tselios, 2012. "Public investment and regional growth and convergence: Evidence from Greece," Papers in Regional Science, Wiley Blackwell, vol. 91(3), pages 543-568, August.
    9. Elburz, Zeynep & Nijkamp, Peter & Pels, Eric, 2017. "Public infrastructure and regional growth: Lessons from meta-analysis," Journal of Transport Geography, Elsevier, vol. 58(C), pages 1-8.
    10. Pedro R.D. Bom & Jenny E. Ligthart, 2014. "What Have We Learned From Three Decades Of Research On The Productivity Of Public Capital?," Journal of Economic Surveys, Wiley Blackwell, vol. 28(5), pages 889-916, December.
    11. Angel De la Fuente, 2010. "Infrastructures and productivity: an updated survey," Working Papers 1018, BBVA Bank, Economic Research Department.
    12. Duarte Bom, P.R. & Ligthart, J.E., 2008. "How Productive is Public Capital? A Meta-Analysis," Discussion Paper 2008-10, Tilburg University, Center for Economic Research.
    13. Torrisi, Gianpiero, 2009. "Infrastructures and economic performance: a critical comparison across four approaches," MPRA Paper 18688, University Library of Munich, Germany.
    14. Federici, Andrea, 2018. "Il rapporto tra capitale pubblico e altre variabili macroeconomiche: un'applicazione empirica [The relationship between public capital and other macroeconomic variables: an empirical application]," MPRA Paper 88516, University Library of Munich, Germany.
    15. Zolfaghari, Mehdi & Kabiri, Mahbobe & Saadatmanesh, Hamideh, 2020. "Impact of socio-economic infrastructure investments on income inequality in Iran," Journal of Policy Modeling, Elsevier, vol. 42(5), pages 1146-1168.
    16. Fedderke, J.W. & Bogetic, Z., 2009. "Infrastructure and Growth in South Africa: Direct and Indirect Productivity Impacts of 19 Infrastructure Measures," World Development, Elsevier, vol. 37(9), pages 1522-1539, September.
    17. Minea, Alexandru, 2008. "The Role of Public Spending in the Growth Theory Evolution," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 5(2), pages 99-120, June.
    18. Trofimov, Ivan D., 2020. "Public capital and productive economy profits: evidence from OECD economies," MPRA Paper 106848, University Library of Munich, Germany.
    19. Jiang, Xiushan & He, Xiang & Zhang, Lei & Qin, Huanhuan & Shao, Fengru, 2017. "Multimodal transportation infrastructure investment and regional economic development: A structural equation modeling empirical analysis in China from 1986 to 2011," Transport Policy, Elsevier, vol. 54(C), pages 43-52.
    20. Torrisi, Gianpiero, 2009. "Public infrastructure: definition, classification and measurement issues," MPRA Paper 12990, University Library of Munich, Germany.

    More about this item

    JEL classification:

    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ces:ifodrs:72. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Klaus Wohlrabe (email available below). General contact details of provider: https://edirc.repec.org/data/ifooode.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.