Working Paper: CEPR ID: DP10988
Authors: Riccardo Crescenzi; Marco Di Cataldo; Andrés Rodríguez-Pose
Abstract: Transport infrastructure investment is a cornerstone of growth-promoting strategies. However, in the case of Europe the relevant literature is increasingly failing to find a clear link between infrastructure investment and economic performance. This may be a consequence of overlooking the role of government institutions. This paper assesses the connection between regional quality of government and the returns of different types of road infrastructure in EU regions during the period between 1995 and 2009. The results unveil a strong influence of regional quality of government on the economic returns of transport infrastructure. In weak institutional contexts, investments in motorways ? the preferred option by local governments ? yield significantly lower returns than the more humble but possibly more efficient secondary road. Government institutions also affect the returns of transport maintenance investment.
Keywords: economic growth; europe; government quality; institutions; public capital investment; regions; transport infrastructure
JEL Codes: O43; R11; R40; R58
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Transport infrastructure investments (motorways) (R42) | Economic growth (O00) |
| Transport infrastructure investments (other roads) (R42) | Economic growth (O00) |
| Government quality (H11) | Economic returns of transport infrastructure investments (R42) |
| Quality of government (QOG) (H11) | Economic returns of motorway investments (R42) |
| Quality of government (QOG) (H11) | Economic returns of other road investments (R42) |
| Investments in motorways + Quality of government (QOG) (H54) | Economic performance (P17) |
| Investments in other roads + Quality of government (QOG) (H54) | Economic performance (P17) |
| Maintenance investments in transport infrastructure (R42) | Economic performance (P17) |