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Public Investment, Convergence and Productivity Growth in European regions

Roberto Martino

Working Papers - Economics from Universita' degli Studi di Firenze, Dipartimento di Scienze per l'Economia e l'Impresa

Abstract: This paper estimates an augmented growth model to analyse the contribution of public investment to productivity growth for European regions. The empirical model accounts for the accumulation of public capital, the stock of infrastructure and the creation of knowledge by the government sector, alongside other growth determinants, as institutions, education, and business R&D. Convergence dynamics are also explored. Data include 273 NUTS2 European regions from 27 countries from 1999 to 2018. The empirical evidence presented suggests that public investment is positively associated with productivity growth and complementarities with business investment are in place. Furthermore, returns on both types of investments are larger in the regions of the Southern periphery, flagging policy space for further public and private productive spending. No significant effect is found for the stock of infrastructure. Public R&D has an indirect impact on productivity growth through the mediating effect of business R&D, while institutional quality is a horizontal determinant of growth.

Pages: 37 pages
Date: 2021
New Economics Papers: this item is included in nep-cwa, nep-eec, nep-eff, nep-fdg, nep-sbm and nep-tid
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