Abstract
The objective of this paper is to investigate the regional incidence of the effects of public investment in transportation infrastructures in Portugal. Our methodological approach consists of estimating vector autoregressive (VAR) models for the national economy as well as for each of the five administrative regions in the country. In the regional models, both public investment in transportation infrastructures in the region and public investment in transportation infrastructures elsewhere are considered, thereby taking into consideration the potential existence of regional spillovers. Empirical results suggest that although public investment in transportation infrastructures has been a powerful instrument to promote long-term growth, it does so in a way that is rather unbalanced across regions. We show that public investment in transportation infrastructures has markedly contributed to the concentration of economic activity in Lisbon, the largest region in the country, and therefore has contributed markedly to the macrocephaly of the country.
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Notes
Although we recognize that the volume of public investment in monetary terms is not the only way to measure the role which infrastructures play in the productive process. In this study, we follow a well-established tradition in the economics literature that uses indeed public investment in monetary terms as the main indicator.
Note that whenever the expression public investment is used in this paper, it refers exclusively to public investment in transportation infrastructures. In addition, whenever the term aggregate public investment is used, it refers to public investment in transportation infrastructures aggregated across regions.
Notice that we are not claiming that regional distribution of transportation infrastructures is the only reason, or even one of the most important reasons, for the concentration of economic activity. Indeed, in a context of increasing integration we would expect international pressures to have an important impact on the regional distribution of economic activity. Our point still remains that the patterns of public investment in transportation infrastructures in the country have contributed to such concentration of economic activity.
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The authors would like to thank the editor as well as two anonymous referees for helpful comments and suggestions.
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This paper is part of a research project on the “Effects of Public Investment in Transportation Infrastructure in Portugal” sponsored by the Portuguese-American Development Foundation. The opinions expressed in this article, however, are of the sole responsibility of its authors and in no way should be perceived as reflecting the views of the Foundation or the institutions with which the authors are affiliated.
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Pereira, A.M., Andraz, J.M. Public investment in transportation infrastructures and regional asymmetries in Portugal. Ann Reg Sci 40, 803–817 (2006). https://doi.org/10.1007/s00168-006-0066-6
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DOI: https://doi.org/10.1007/s00168-006-0066-6