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Contribution to Productivity or Pork Barrel?: The Two Faces of Infrastructure Investment

  • Olivier Cadot
  • Lars-Hendrik Röller
  • Andreas Stephan

This paper proposes a simultaneous-equation approach to the estimation of the contribution of transport infrastructure accumulation to regional growth. We model explicitly the political-economy process driving infrastructure investments; in doing so, we eliminate a potential source of bias in production-function estimates and generate testable hypotheses on the forces that shape infrastructure policy. Our empirical findings on a panel of France's regions over 1985-92 suggest that electoral concerns and influence activities were, indeed, significant determinants of the cross-regional allocation of transportation infrastructure investments. By contrast, we find little evidence of concern for the maximization of economic returns to infrastructure spending, even after controlling for pork-barrel.

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File URL: http://www.diw.de/documents/publikationen/73/diw_01.c.42662.de/dp458.pdf
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Paper provided by DIW Berlin, German Institute for Economic Research in its series Discussion Papers of DIW Berlin with number 458.

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Length: 32 p.
Date of creation: 2004
Date of revision:
Handle: RePEc:diw:diwwpp:dp458
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  1. Haughwout, Andrew F. & Inman, Robert P., 2001. "Fiscal policies in open cities with firms and households," Regional Science and Urban Economics, Elsevier, vol. 31(2-3), pages 147-180, April.
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