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Is it Redistribution or Centralization? On the Determinants of Government Investment in Infrastructure

Author

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  • Daniel Albalate

    () (Department of Economic Policy, Universitat de Barcelona, Avinguda Diagonal 690, 08034 Barcelona, Spain.)

  • Germà Bel

    () (Department of Economic Policy, Universitat de Barcelona, Avinguda Diagonal 690, 08034 Barcelona, Spain.)

  • Xavier Fageda

    () (Department of Economic Policy, Universitat de Barcelona, Avinguda Diagonal 690, 08034 Barcelona, Spain.)

Abstract

The dilemma efficiency versus equity, together with political partisan interests, has received increasing attention to explain the territorial allocation of investments. However, centralization intended to introduce or reinforce hierarchization in the political system has not been object as of now of empirical analysis. Our main contribution to the literature is providing evidence that meta-political objectives related to the ordering of political power and administration influence regional investment. In this way, we find evidence that network mode’s (roads and railways) investment programs are influenced by the centralization strategy of investing near to the political capital, while investment effort in no-network modes (airports and ports) appears to be positively related to distance. Since investment in surface transportation infrastructures is much higher than that in airports and ports, and taken into account that regions surrounding the political capital are poorer than the average, we suggest that centralization rather than redistribution has been the driver for the concentration of public investment on these regions.

Suggested Citation

  • Daniel Albalate & Germà Bel & Xavier Fageda, 2010. "Is it Redistribution or Centralization? On the Determinants of Government Investment in Infrastructure," Working Papers XREAP2010-15, Xarxa de Referència en Economia Aplicada (XREAP), revised Dec 2010.
  • Handle: RePEc:xrp:wpaper:xreap2010-15
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    References listed on IDEAS

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    1. Kemmerling, Achim & Stephan, Andreas, 2002. "The Contribution of Local Public Infrastructure to Private Productivity and Its Political Economy: Evidence from a Panel of Large German Cities," Public Choice, Springer, vol. 113(3-4), pages 403-424, December.
    2. Achim Kemmerling & Andreas Stephan, 2010. "The Determinants of Regional Transport Investment Across Europe," Chapters,in: The Political Economy of Inter-Regional Fiscal Flows, chapter 11 Edward Elgar Publishing.
    3. Knight, Brian, 2004. "Parochial interests and the centralized provision of local public goods: evidence from congressional voting on transportation projects," Journal of Public Economics, Elsevier, pages 845-866.
    4. Norihiko Yamano & Toru Ohkawara, 2000. "The Regional Allocation of Public Investment: Efficiency or Equity?," Journal of Regional Science, Wiley Blackwell, vol. 40(2), pages 205-229.
    5. Knight, Brian, 2004. "Parochial interests and the centralized provision of local public goods: evidence from congressional voting on transportation projects," Journal of Public Economics, Elsevier, pages 845-866.
    6. Jean-Paul Faguet, 2004. "Why So Much Centralization? A Model of Primitive Centripetal Accumulation," STICERD - Development Economics Papers - From 2008 this series has been superseded by Economic Organisation and Public Policy Discussion Papers 43, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
    7. de la Fuente, Angel, 2004. "Second-best redistribution through public investment: a characterization, an empirical test and an application to the case of Spain," Regional Science and Urban Economics, Elsevier, vol. 34(5), pages 489-503, September.
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    Cited by:

    1. Veruska Oppedisano & Gilberto Turati, 2010. "What are the causes of educational inequalities and of their evolution over time in Europe? Evidence from PISA," Working Papers XREAP2010-16, Xarxa de Referència en Economia Aplicada (XREAP), revised Dec 2010.
    2. Xavier Fageda & Jordi Perdiguero, 2014. "An Empirical Analysis of a Merger Between a Network and Low-cost Airlines," Journal of Transport Economics and Policy, University of Bath, vol. 48(1), pages 81-96, January.
    3. Montserrat Guillen & Adelina Comas-Herrera, 2011. "How much risk is mitigated by LTC Insurance? A case study of the public system in Spain," Working Papers XREAP2011-07, Xarxa de Referència en Economia Aplicada (XREAP), revised Jun 2011.
    4. Mercedes Ayuso & Montserrat Guillen & Catalina Bolancé, 2011. "Loss risk through fraud in car insurance," Working Papers XREAP2011-08, Xarxa de Referència en Economia Aplicada (XREAP), revised Jun 2011.

    More about this item

    Keywords

    Investment; infrastructures; centralization; redistribution;

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