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Public Capital and Economic Performance: Evidence from Italy

Federico Bonaglia (), Eliana La Ferrara () and Massimiliano Marcellino

Giornale degli Economisti, 2000, vol. 59, issue 2, 221-244

Abstract: This paper addresses the issue of whether and by how much public capital can enhance economic performance. We apply different methodologies to Italian regional data for the period 1970-1994. The results are presented for Italy as a whole, for different macroregions, and for individual categories of public capital. For the Center and the South, the methodologies employed indicate a positive contribution of infrastructure investment to TFP growth, output, and cost reduction. However, the magnitude of the cost reducing effect does not seem large enough to outweigh the social user cost of public capital. Also, we get mixed results on which types of infrastructure are most effective. Overall, investment in transportation appears to be the most productive: railways in the North and roads in the Center and South are the categories that mostly contributed to TFP growth.

Keywords: public capital; infrastructure; TFP (search for similar items in EconPapers)
JEL-codes: H54 O47 C50 (search for similar items in EconPapers)
Date: 2000
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