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Infrastructure Investment in Portugal and the Traded/Non-Traded Industry Mix

Alfredo Pereira () and Rui Pereira

No 78, GEE Papers from Gabinete de Estratégia e Estudos, Ministério da Economia

Abstract: Using a newly-developed data set for Portugal, we analyze the industry-level effects of infrastructure investment. Focusing on the divide between traded and non-traded industries, we find that infrastructure investments have a non-traded bias, as these shift the industry mix towards private and public services. We also find that the industries that benefit the most in relative terms are all non-traded: construction, trade, and real estate, among the private services, and education and health, amongst the public services. Similarly, emerging trading sectors, such as hospitality and professional services stand to gain. The positive impacts on traded industries are too small to make a difference. These results highlight that infrastructure-based strategies are not neutral in terms of the industry mix. Moreover, with most of the benefits accruing to non-traded industries, such a development model that is heavily based on domestic demand may be unsustainable in light of Portugal’s current foreign account position

Keywords: Infrastructure Investment; Economic Performance; Industry Mix; Traded and Non-traded Sectors; VAR; Portugal. (search for similar items in EconPapers)
JEL-codes: C32 E22 H54 O52 L90 L98 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-mac
Date: 2017-09, Revised 2017-09
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