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Public investment and regional growth and convergence: Evidence from Greece

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  • Psycharis, Yannis
  • Rodriguez-Pose, Andres
  • Tselios, Vassilis

Abstract

This paper estimates the impact of public investment on regional economic growth and convergence at the NUTS III level in Greece. Using a new database of public expenditure per region for the period 1978-2007, it proposes a model which captures not just the impact of public investment in Greek prefectures, but also the spillover effects related to the existence of externalities from neighbouring regions. The results point to a positive long-run impact of public investment per capita on regional economic growth – but not on convergence – which also generates considerable spillover effects. However, the returns vary according to different types of public investment, with education and infrastructure spillovers having the highest impact. In general, public investment externalities seem to be more relevant for regional growth than direct public investment in each region. Finally, the impact of different types of public investment in Greece is mediated by politics and political factors, but the effect of politics disappears once we control for political-period-specific spatial-invariant variables.

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  • Psycharis, Yannis & Rodriguez-Pose, Andres & Tselios, Vassilis, 2012. "Public investment and regional growth and convergence: Evidence from Greece," CEPR Discussion Papers 9011, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:9011
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    Cited by:

    1. repec:taf:regstd:v:50:y:2016:i:7:p:1097-1112 is not listed on IDEAS
    2. Andrés Rodríguez-Pose & Yannis Psycharis & Vassilis Tselios, 2016. "Liberals, Socialists, and pork-barrel politics in Greece," Environment and Planning A, , vol. 48(8), pages 1473-1492, August.
    3. Tubadji, Annie & Nijkamp, Peter, 2016. "Impact of Intangible Cultural Capital on Regional Economic Development: A Study on Culture-Based Development in Greece," Journal of Regional Analysis and Policy, Mid-Continent Regional Science Association, vol. 46(1).
    4. Andrés Rodríguez-Pose & Yannis Psycharis & Vassilis Tselios, 2016. "Politics and Investment: Examining the Territorial Allocation of Public Investment in Greece," Regional Studies, Taylor & Francis Journals, pages 1097-1112.
    5. Gilberto Seravalli, 2016. "Dimensioni e crescita delle città in Europa: l’incertezza danneggia soprattutto le città medie," SCIENZE REGIONALI, FrancoAngeli Editore, vol. 2016(2), pages 91-108.

    More about this item

    Keywords

    convergence; economic growth; Greece; public investment; regional economics; regional policy; spatial econometrics; spillover effects;

    JEL classification:

    • 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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