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Infrastructure and growth in the European Union: an empirical analysis at the regional level in a spatial framework

Author

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  • Chiara DEL BO

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  • Massimo FLORIO

    ()

Abstract

In this paper we examine the return of public investment in the EU regions. We consider different forms of infrastructure capital by examining the relationship between a set of infrastructure indicators and economic performance at the NUTS2 level with an empirical model derived from the production-function approach. From a social planner’s perspective, we want to see which form of infrastructure investment has higher returns, considering structural differences in regions. The main contribution of this paper is to consider the impact of different types of infrastructure on growth, disaggregated at the regional level in the European Union, with an explicit focus on the New Member States, and correcting for spatial dependence and heterogeneity issues. We find that the highest rates of return are associated mainly with TLC, quality and accessibility of the region’s transportation network, while endowment of traditional road and railway infrastructure has a positive but slightly lower impact. We also contribute to the debate on convergence, finding that the β-convergence hypothesis holds also when the model encompasses several controls.

Suggested Citation

  • Chiara DEL BO & Massimo FLORIO, 2008. "Infrastructure and growth in the European Union: an empirical analysis at the regional level in a spatial framework," Departmental Working Papers 2008-37, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
  • Handle: RePEc:mil:wpdepa:2008-37
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    File URL: http://wp.demm.unimi.it/files/wp/2008/DEMM-2008_037wp.pdf
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    References listed on IDEAS

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    1. Enrique López-Bazo & Esther Vayá & Manuel Artís, 2004. "Regional Externalities And Growth: Evidence From European Regions," Journal of Regional Science, Wiley Blackwell, vol. 44(1), pages 43-73.
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    14. Holtz-Eakin, Douglas, 1994. "Public-Sector Capital and the Productivity Puzzle," The Review of Economics and Statistics, MIT Press, vol. 76(1), pages 12-21, February.
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    16. 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.
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    Citations

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    Cited by:

    1. Andrea Bonilla Bolaños, 2017. "Initiative for Infrastructure Integration in South America: Way Toward Regional Convergence," International Economic Journal, Taylor & Francis Journals, vol. 31(2), pages 326-354, April.
    2. Alberto Bucci & Chiara Del Bo, 2009. "On the interaction between public investment and private capital in economic growth," UNIMI - Research Papers in Economics, Business, and Statistics unimi-1092, Universitá degli Studi di Milano.
    3. Andrea Bonilla Bolaños, 2016. "A step further in the theory of regional integration: A look at the Unasur's integration strategy," Working Papers 1617, Groupe d'Analyse et de Théorie Economique Lyon St-Étienne (GATE Lyon St-Étienne), Université de Lyon.
    4. Caragliu, A. & Del Bo, C. & Nijkamp, P., 2009. "Smart cities in Europe," Serie Research Memoranda 0048, VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics.
    5. Massimo Florio (ed.), 2011. "Public Investment, Growth and Fiscal Constraints," Books, Edward Elgar Publishing, number 14155.
    6. Chiara DEL BO, 2009. "Recent advances in public investment, fiscal policy and growth," Departmental Working Papers 2009-25, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
    7. Víctor Adame & Javier Alonso & Luisa Pérez & David Tuesta, 2017. "Infrastructure & economic growth from a meta-analysis approach: do all roads lead to Rome?," Working Papers 17/07, BBVA Bank, Economic Research Department.

    More about this item

    Keywords

    Infrastructure capital; regional growth; convergence; spatial econometrics.;

    JEL classification:

    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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