Productivity effects and determinants of public infrastructure investment

This study aims to investigate three important issues whether or not public infrastructure contributes to production in the private sector, whether or not political economy factors such as political situation affect the allocation of public infrastructure investment, and what the government’s invest...

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Bibliographic Details
Published in:The Annals of regional science 2010-06, Vol.44 (3), p.493-521
Main Authors: Mizutani, Fumitoshi, Tanaka, Tomoyasu
Format: Article
Language:English
Subjects:
Bgi / Prodig
Capital
Capital investments
Capital stock
Datasets
Economics
Economics and Finance
Effects
Environmental Economics
Geography
Government
Government grants
Growth rate
Human geography
Infrastructure
Investment
Investments
Japan
Landscape/Regional and Urban Planning
Lobbying
Microeconomics
Original Paper
Political and economic geography
Political economy
Politics
Private sector
Production
Production functions
Productivity
Productivity measurement
Public infrastructure
Public investments
Public private partnerships
Regional economy and planning
Regional/Spatial Science
Regions
Studies
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Summary:This study aims to investigate three important issues whether or not public infrastructure contributes to production in the private sector, whether or not political economy factors such as political situation affect the allocation of public infrastructure investment, and what the government’s investment behavior is. We estimate simultaneous equations by using a panel data set of 46 prefectures in Japan for five-time periods from 1975 to 1990. We conclude the following: (1) public capital contributes to productivity, (2) the investment behavior of both governments is efficiency-oriented for private productivity and for the capital stock level, (3) a substitute of public capital investment between the national and prefectural governments can be found, (4) there is a clear political factor in the national government’s public investment function, and (5) the availability of national government grants for the construction of infrastructure boosts investment among prefectural governments.
ISSN:0570-1864
1432-0592
DOI:10.1007/s00168-008-0279-y