Regional productivity variation and the impact of public capital stock: an analysis with spatial interaction, with reference to Spain
In this paper we examine whether variations in the level of public capital across Spain?s Provinces affected productivity levels over the period 1996-2005. The analysis is motivated by contemporary urban economics theory, involving a production function for the competitive sector of the economy (â€žindustry?) which includes the level of composite services derived from 'service' firms under monopolistic competition. The outcome is potentially increasing returns to scale resulting from pecuniary externalities deriving from internal increasing returns in the monopolistic competition sector. We extend the production function by also making (log) labour efficiency a function of (log) total public capital stock and (log) human capital stock, leading to a simple and empirically tractable reduced form linking productivity level to density of employment, human capital and public capital stock. The model is further extended to include technological externalities or spillovers across provinces. Using panel data methodology, we find significant elasticities for total capital stock and for human capital stock, and a significant impact for employment density. The finding that the effect of public capital is significantly different from zero, indicating that it has a direct effect even after controlling for employment density, is contrary to some of the earlier research findings which leave the question of the impact of public capital unresolved.
|Date of creation:||Jan 2011|
|Contact details of provider:|| Postal: Sir William Duncan Building, 130 Rottenrow, Glasgow G4 0GE|
Phone: +44 (0)141 548 3842
Fax: +44 (0)141 548 4445
Web page: http://www.strath.ac.uk/economics/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Matilde Mas & Joaquin Maudos & Francisco Perez & Ezequiel Uriel, 1996.
"Infrastructures and Productivity in the Spanish Regions,"
Taylor & Francis Journals, vol. 30(7), pages 641-649.
- Ezequiel Uriel Jiménez & Francisco Pérez García & Matilde Mas Ivars & Joaquín Maudos Villarroya, 1995. "Infrastructures And Productivity In The Spanish Regions," Working Papers. Serie EC 1995-10, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
- Garcia-Mila, Teresa & McGuire, Therese J & Porter, Robert H, 1996.
"The Effect of Public Capital in State-Level Production Functions Reconsidered,"
The Review of Economics and Statistics,
MIT Press, vol. 78(1), pages 177-180, February.
- 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.
- Bernard Fingleton, 2001. "Equilibrium and Economic Growth: Spatial Econometric Models and Simulations," Journal of Regional Science, Wiley Blackwell, vol. 41(1), pages 117-147.
- 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.
- Miguel Márquez & Julián Ramajo & Geoffrey Hewings, 2010. "Measuring the spillover effects of public capital: a bi-regional structural vector autoregressive analysis," Letters in Spatial and Resource Sciences, Springer, vol. 3(3), pages 111-125, October.
- Pedro Cantos & Mercedes Gumbau‐Albert & Joaquín Maudos, 2003. "Transport infrastructures, spillover effects and regional growth: evidence of the Spanish case," Transport Reviews, Taylor & Francis Journals, vol. 25(1), pages 25-50, December.
- Aschauer, David Alan, 1989.
"Is public expenditure productive?,"
Journal of Monetary Economics,
Elsevier, vol. 23(2), pages 177-200, March.
- Alfredo Marvao Pereira & Oriol Roca Sagalés, 2002.
"Spillover effects of public capital formation : evidence from the spanish regions,"
wpdea0210, Department of Applied Economics at Universitat Autonoma of Barcelona.
- 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.
- Angel de la Fuente, 2008.
"Inversión en infraestructuras, crecimiento y convergencia regional,"
- Angel de la Fuente, 2008. "Inversión en infraestructuras, crecimiento y convergencia regional," UFAE and IAE Working Papers 753.08, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
- Ratner, Jonathan B., 1983. "Government capital and the production function for U.S. private output," Economics Letters, Elsevier, vol. 13(2-3), pages 213-217.
- Mark E Schaffer, 2005. "XTIVREG2: Stata module to perform extended IV/2SLS, GMM and AC/HAC, LIML and k-class regression for panel data models," Statistical Software Components S456501, Boston College Department of Economics, revised 22 Feb 2015.
- Voss, Graham M., 2002. "Public and private investment in the United States and Canada," Economic Modelling, Elsevier, vol. 19(4), pages 641-664, August.
- Antonio Ciccone & Robert E. Hall, 1993.
"Productivity and the Density of Economic Activity,"
NBER Working Papers
4313, National Bureau of Economic Research, Inc.
- Bernard Fingleton, 2003. "Externalities, Economic Geography, And Spatial Econometrics: Conceptual And Modeling Developments," International Regional Science Review, SAGE Publishing, vol. 26(2), pages 197-207, April.
- Douglas Holtz-Eakin & Mary E. Lovely, 1995.
"Scale Economies, Returns to Variety, and the Productivity of Public Infrastructure,"
NBER Working Papers
5295, National Bureau of Economic Research, Inc.
- Holtz-Eakin, Douglas & Lovely, Mary E., 1996. "Scale economies, returns to variety, and the productivity of public infrastructure," Regional Science and Urban Economics, Elsevier, vol. 26(2), pages 105-123, April.
- Bernard Fingleton & Miguel GÃ³mez-Antonio, 2009.
"Analysing the impact of public capital stock using the NEG wage equation: a panel data approach,"
0912, University of Strathclyde Business School, Department of Economics.
- Gómez-Antonioa, Miguel & Fingleton, Bernard, 2009. "Analysing the impact of public capital stock using the NEG wage equation: a panel data approach," SIRE Discussion Papers 2009-29, Scottish Institute for Research in Economics (SIRE).
- Bernard Fingleton & Miguel Gómez-Antonio, 2009. "Analysing the impact of public capital stock using the NEG wage equation: a panel data approach," LSE Research Online Documents on Economics 33241, London School of Economics and Political Science, LSE Library.
- Bernard Fingleton & Miguel Gómez-Antonio, 2009. "Analysing the Impact of Public Capital Stock Using the NEG Wage Equation: A Panel Data Approach," SERC Discussion Papers 0024, Spatial Economics Research Centre, LSE.
- Rosina Moreno & Enrique LÃ³pez-Bazo, 2007. "Returns to Local and Transport Infrastructure under Regional Spillovers," International Regional Science Review, SAGE Publishing, vol. 30(1), pages 47-71, January.
- Jeffrey P. Cohen & Catherine J. Morrison Paul, 2004. "Public Infrastructure Investment, Interstate Spatial Spillovers, and Manufacturing Costs," The Review of Economics and Statistics, MIT Press, vol. 86(2), pages 551-560, May.
- Joeé Emilio Boscá & Francisco Javier Escribá & María José Murgui, 2002.
"The Effect of Public Infrastructure on the Private Productive Sector of Spanish Regions,"
Journal of Regional Science,
Wiley Blackwell, vol. 42(2), pages 301-326.
- Boscá, José Emilio & Escribá, Javier & Murgui, María José, 2000. "The Effect Of Public Infrastructures On The Private Productive Sector Of Spanish Regions," ERSA conference papers ersa00p165, European Regional Science Association.
- Arantza Gorostiaga, 1999. "¿Cómo afecta el capital público y el capital humano al crecimiento?," Investigaciones Economicas, Fundación SEPI, vol. 23(1), pages 95-114, January.
- Otto, Glenn & Voss, Graham M, 1994. "Public Capital and Private Sector Productivity," The Economic Record, The Economic Society of Australia, vol. 70(209), pages 121-132, June.
- Bernard Fingleton, 2004. "Some alternative geo-economics for Europe's regions," Journal of Economic Geography, Oxford University Press, vol. 4(4), pages 389-420, August.
- E. Marrocu & R. Paci, 2006.
"The effects of public capital on the productivity of the Italian regions,"
Working Paper CRENoS
200613, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.
- Emanuela Marrocu & Raffaele Paci, 2010. "The effects of public capital on the productivity of the Italian regions," Applied Economics, Taylor & Francis Journals, vol. 42(8), pages 989-1002.
- John M. Quigley, 1998. "Urban Diversity and Economic Growth," Journal of Economic Perspectives, American Economic Association, vol. 12(2), pages 127-138, Spring.
- Bernard Fingleton, 2003. "Increasing returns: evidence from local wage rates in Great Britain," Oxford Economic Papers, Oxford University Press, vol. 55(4), pages 716-739, October.
- Moreno, Rosina & Lopez-Bazo, Enrique & Artis, Manuel, 2002. "Public infrastructure and the performance of manufacturing industries: short- and long-run effects," Regional Science and Urban Economics, Elsevier, vol. 32(1), pages 97-121, January.
- Douglas Holtz-Eakin & Amy Ellen Schwartz, 1995.
"Spatial Productivity Spillovers from Public Infrastructure: Evidence from State Highways,"
NBER Working Papers
5004, National Bureau of Economic Research, Inc.
- Douglas Holtz-Eakin & Amy Schwartz, 1995. "Spatial productivity spillovers from public infrastructure: Evidence from state highways," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 2(3), pages 459-468, October.
- Goerlich Gisbert Francisco J. & Mas Ivars Matilde, 2002. "La evolución económica de las provincias españolas (1955-1998). Volumen II, Desigualdad y convergencia," Books, Fundacion BBVA / BBVA Foundation, edition 2, number 201125.
- Gonzalez-Paramo, Jose Manuel & Martinez, Diego, 2003. "Convergence across Spanish Regions: New Evidence on the Effects of Public Investment," The Review of Regional Studies, Southern Regional Science Association, vol. 33(2), pages 184-205.
- Rafael Flores De Frutos & Mercedes Gracia-Diez & Teodosio Perez, 1998. "Public capital stock and economic growth: an analysis of the Spanish economy," Applied Economics, Taylor & Francis Journals, vol. 30(8), pages 985-994.
- David Owyong & Shandre Thangavelu, 2001. "An empirical study on public capital spillovers from the USA to Canada," Applied Economics, Taylor & Francis Journals, vol. 33(11), pages 1493-1499.
- Brian Sloboda & Vincent Yao, 2008. "Interstate spillovers of private capital and public spending," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 42(3), pages 505-518, September.
- Evans, Paul & Karras, Georgios, 1994. "Is government capital productive? Evidence from a panel of seven countries," Journal of Macroeconomics, Elsevier, vol. 16(2), pages 271-279.
- Roberto Ezcurra & Carlos Gil & Pedro Pascual & Manuel Rapún, 2005.
"Public capital, regional productivity and spatial spillovers,"
The Annals of Regional Science,
Springer;Western Regional Science Association, vol. 39(3), pages 471-494, 09.
- Carlos Gil Canaleta & Pedro Pascual Arzoz & Manuel Rapun Gurate, 1998. "Public Capital, Regional Productivity and Spatial Spillovers," Documentos de Trabajo - Lan Gaiak Departamento de Economía - Universidad Pública de Navarra 9811, Departamento de Economía - Universidad Pública de Navarra.
- Rivera-Batiz, Francisco L., 1988. "Increasing returns, monopolistic competition, and agglomeration economies in consumption and production," Regional Science and Urban Economics, Elsevier, vol. 18(1), pages 125-153, February.
- Bajo-Rubio, Oscar & Sosvilla-Rivero, Simon, 1993. "Does public capital affect private sector performance? : An analysis of the Spanish case, 1964-1988," Economic Modelling, Elsevier, vol. 10(3), pages 179-185, July.
- Alfredo Pereira & Jorge Andraz, 2006. "Public investment in transportation infrastructures and regional asymmetries in Portugal," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 40(4), pages 803-817, December.
When requesting a correction, please mention this item's handle: RePEc:str:wpaper:1102. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Kirsty Hall)
If references are entirely missing, you can add them using this form.