The Effect of Public Infrastructure on the Private Productive Sector of Spanish Regions

Abstract

In this paper we analyze the effect of infrastructure on the cost and productivity performance of the private productive sector of Spanish regions over the period 1980-1993. We use a dual approach based on cost functions that allows us to recover the usual parameters estimated with production functions. In addition, we obtain rates of return and cost elasticities of production factors at the regional level. Our framework explicitly considers that some factors are quasi-fixed and their volume can differ from their optimal endowment levels. Our results indicate that the public sector has contributed significantly to enhance productivity and reduce costs in the private sector of almost every Spanish region. Nevertheless, there is still scope for the government to continue its investment efforts, given that there remains an appreciable gap between observed and optimal public capital, and we find that in the long run, public capital promotes private investment. Copyright 2002 Blackwell Publishers Inc.

Regional productivity variation and the impact of public capital stock: an analysis with spatial interaction, with reference to Spain

“…With regard to the Spanish regions, most papers suggest a positive effect, for example, Marquez et al (2009), De la Fuente (2008), Cantos et al (2005), Ezcurra et al (2005), Moreno et al (2002), Boscá et al (2002), Mas et al (1996), Bajo-Rubio and Sosvilla-Rivero (1993), Flores de Frutos et al (1998) and Gómez-Antonio and Fingleton (2010). However some papers, such as Gorostiaga (1999) and Gonzalez-Páramo and Martinez (2003) do not find a significant effect of public capital stock on economic growth.…”

Profitability of Investments in Education: Evidence from Spanish Regions

“…7 Comparable regional dummies were considered when estimating an aggregate cost system for the Spanish regions in Boscá, Escribá & Murgui (2002). 8 We follow Morrison and Schwartz (1996) in taking this decision.…”

Effects of the hydraulic infrastructure on economic growth: evidence from Catalonia

“…An overview of this extensive literature was provided by De la Fuente (1996), Draper and Herce (1994), Gramlich (1994) and, with particular application to the case of Spain, Á lvarez et al (2003). Some works that have made empirical estimates of the effects of public capital in Spain are the following: Argimón et al (1994), Arslanalp et al (2010), Avilés, Gómez and Sánchez (2001), Boscá et al (2002), Dabán and Murgui (1997), De la Fuente and Vives (1995), Delgado and Á lvarez (2000), García-Fontes and Serra (1994), Gomez-Antonio and Fingleton (2009), González-Páramo (1995), Márquez et al (2011), Moreno et al (2003), Pedraja et al (1999), Pereira and Roca-Sagales (2003) and Raymond (1989).…”