How Do Road Infrastructure Investments Affect the Regional Economy? Evidence from Spain
48 Pages Posted: 19 Dec 2016
Date Written: December 17, 2016
This paper analyses the relationship between road infrastructure improvements and investment in capital assets. Using aggregate data at a provincial level for 1977-2008, an equation for machinery and equipment investment is estimated applying Panel Corrected Standard Errors. The results indicate that the long-term elasticities of investment in relation to market potential, GDP and average years of schooling are 0.90, 0.75 and 0.80, respectively. Additionally, the long run impact of a road infrastructure investment policy is assessed. We find that the elasticities of investment in machinery and equipment, capital stock and GDP in relation to travel time are 1.18, 0.33 and 0.11, respectively.
Keywords: Road Infraestructure, Regional Investment, Market Potential, Travel Time
JEL Classification: R4, R11
Suggested Citation: Suggested Citation