Total factor productivity growth and public capital: the case of Italy

Carmelo Petraglia

STUDI ECONOMICI, 2002, vol. 2002/78, issue 78

Abstract: Total Factor Productivity Growth and Public Capital: The Case of Italy (di Carmelo Petraglia) - ABSTRACT:This paper is aimed at contributing to the debate on the relationship between productive public spending and productivity growth in the Italian regions over the period 1970-1995, the main novelty being the decomposition of productivity growth into technical efficiency change and technological progress by means of Data Envelopment Analysis. The Banker test is used in order to test empirically the significance of public capital in the DEA model, concluding that it would not be correct to consider it as a direct productive input. However, public capital turns out to be positively correlated with productivity growth and both of its mutually exclusive and exhaustive components. These results lead us to conclude that public capital has contributed to productivity gains not directly by entering the production function but as a positive externality to regional economies.

Date: 2002
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