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

Abstract

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.

The Use of Economic Indicators as Early Signals of Stock Market Progress: Perspectives from Market Potential Index

“…As far as commercial infrastructure refers to the advances in common technology and communication devices, the results reported in Table 2 show that investments in infrastructure technology are positively associated with stock market progress. These results indicate that investments in commercial technological infrastructure help the national stock market grow significantly (Albalate et al 2010;Cerra et al 2017;Marcelo et al 2016;Di Liddo et al 2019;Hammami et al 2006). Brealey et al (1996) conclude that the relation between investment in infrastructure and the effect on the growth domestic per-capita as a percentage of the GDP is nonlinear; the studies have been applied from 1990 to 2009 and they concentrated on the private equity participation in country infrastructure.…”

“…A significant and positive relationship exists between market potential and the number of listed firms in the stock market (Albalate et al 2010;Cerra et al 2017;Marcelo et al 2016;Di Liddo et al 2019;Hammami et al 2006).…”