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Evidence on the complex link between infrastructure and regional growth

  • Rosina Moreno Serrano
  • Manuel Artis Ortuno
  • Enrique Lopez Bazo
  • Jordi Surinach Caralt

    (Universitat de Barcelona)

Most studies analysing the infrastructure impact on regional growth show a positive relationship between both variables. However, the public capital elasticity estimated in a Cobb-Douglas function, which is the most common specification in these works, is sometimes too big to be credible, so that the results have been partially desestimated. In the present paper, we give some new advances on the real link between public capital and productivity for the Spanish regions in the period 1964-1991. Firstly, we find out that the association for both variables is smaller when controlling for regional effects, being industry the sector which reaps the most benefits from an increase in the infrastructural dotation. Secondly, concerning to the rigidity of the Coo-Douglas function, it is surpassed by using the variable expansion method. The expanded functional form reveals both the absence of a direct effect of infrastructure and the fact that the link between infrastructure and growth depends on the level of the existing stock (threshold level) and the way infrastructure is articulated in its location relative to other factors. Finally, we analyse the importance of the spatial dimension in infrastructure impact, due to spillover effects. In this sense, the paper provides evidence of the existence of spatial autocorrelation processes that may invalidate previous results.

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Paper provided by Universitat de Barcelona. Espai de Recerca en Economia in its series Working Papers in Economics with number 19.

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Length: 0 pages
Date of creation: 1997
Date of revision:
Handle: RePEc:bar:bedcje:199719
Contact details of provider: Postal: Espai de Recerca en Economia, Facultat de Ciències Econòmiques. Tinent Coronel Valenzuela, Num 1-11 08034 Barcelona. Spain.
Web page: http://www.ere.ub.es

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  1. Kevin T. Duffy-Deno & Randall W. Eberts, 1989. "Public infrastructure and regional economic development: a simultaneous equations approach," Working Paper 8909, Federal Reserve Bank of Cleveland.
  2. Alicia H. Munnell, 1990. "How does public infrastructure affect regional economic performance?," Conference Series ; [Proceedings], Federal Reserve Bank of Boston, vol. 34, pages 69-112.
  3. Ciccone, Antonio & Hall, Robert E, 1996. "Productivity and the Density of Economic Activity," American Economic Review, American Economic Association, vol. 86(1), pages 54-70, March.
  4. Anselin, Luc & Bera, Anil K. & Florax, Raymond & Yoon, Mann J., 1996. "Simple diagnostic tests for spatial dependence," Regional Science and Urban Economics, Elsevier, vol. 26(1), pages 77-104, February.
  5. Alicia H. Munnell, 1990. "Why has productivity growth declined? Productivity and public investment," New England Economic Review, Federal Reserve Bank of Boston, issue Jan, pages 3-22.
  6. Randall W. Eberts, 1986. "Estimating the contribution of urban public infrastructure to regional growth," Working Paper 8610, Federal Reserve Bank of Cleveland.
  7. Ricardo J. Caballero & Richard K. Lyons, 1989. "The Role of External Economies in U.S. Manufacturing," NBER Working Papers 3033, National Bureau of Economic Research, Inc.
  8. Martin, Philippe & Rogers, Carol Ann, 1994. "Industrial Location and Public Infrastructure," CEPR Discussion Papers 909, C.E.P.R. Discussion Papers.
  9. Pinnoi, Nat, 1994. "Public infrastructure and private production measuring relative contributions," Journal of Economic Behavior & Organization, Elsevier, vol. 23(2), pages 127-148, March.
  10. Matilde Mas & Joaquin Maudos & Francisco Perez & Ezequiel Uriel, 1996. "Infrastructures and Productivity in the Spanish Regions," Regional Studies, Taylor & Francis Journals, vol. 30(7), pages 641-649.
  11. David Aschauer, 1988. "Is public expenditure productive?," Staff Memoranda 88-7, Federal Reserve Bank of Chicago.
  12. Teresa Garcia-Milà & 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.
  13. Rietveld, Piet & Boonstra, Jaap, 1995. "On the Supply of Network Infrastructure: Highways and Railways in European Regions," The Annals of Regional Science, Springer, vol. 29(2), pages 207-20, May.
  14. Button, Kenneth J, et al, 1995. "Transport and Industrial and Commercial Location," The Annals of Regional Science, Springer, vol. 29(2), pages 189-206, May.
  15. Randall W. Eberts, 1990. "Cross-sectional analysis of public infrastructure and regional productivity growth," Working Paper 9004, Federal Reserve Bank of Cleveland.
  16. Crihfield, John B. & Panggabean, Martin P. H., 1995. "Is public infrastructure productive? A metropolitan perspective using new capital stock estimates," Regional Science and Urban Economics, Elsevier, vol. 25(5), pages 607-630, October.
  17. 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.
  18. Robert Eisner, 1991. "Infrastructure and regional economic performance: comment," New England Economic Review, Federal Reserve Bank of Boston, issue Sep, pages 47-58.
  19. Enrique Lopez Bazo & Esther Vaya Valcarce & Antonio Jose Mora & Jordi Surinach Caralt, 1997. "Regional economic dynamics and convergence in the european union," Working Papers in Economics 12, Universitat de Barcelona. Espai de Recerca en Economia.
  20. Day, Richard H. & Zou, Gang, 1994. "Infrastructure, restricted factor substitution and economic growth," Journal of Economic Behavior & Organization, Elsevier, vol. 23(2), pages 149-166, March.
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