Working Paper: CEPR ID: DP2336
Authors: Olivier Cadot; Larshendrik Røller; Andreas Stephan
Abstract: This paper proposes a simultaneous-equation approach to the estimation of the contribution of transport infrastructure accumulation to regional growth. We model explicitly the political-economy process driving infrastructure investments; in doing so, we eliminate a potential source of bias in production-function estimates and generate testable hypotheses on the forces that shape infrastructure policy. Our empirical findings on a panel of France's regions over 1985-91 suggest that influence activities were, indeed, significant determinants of the cross-regional allocation of transportation infrastructure investments. Moreover, we find little evidence of concern for the maximization of economic returns to infrastructure spending, even after controlling for pork-barrel and when imposing an exogenous preference for convergence in regional productivity levels.
Keywords: growth; infrastructure; political economy; lobbying; france
JEL Codes: D72; D78; O40
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| lobbying activities (D72) | infrastructure investment (H54) |
| political alignment (D72) | infrastructure investment (H54) |
| infrastructure investment (H54) | regional growth (R11) |
| lobbying activities (D72) | regional growth (R11) |
| political influence (D72) | infrastructure allocation (H54) |