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Is it Redistribution or Centralization? On the Determinants of Government Investment in Infrastructure

Daniel Albalate (), Germà Bel () and Xavier Fageda

No XREAP2010-15, Working Papers from Xarxa de Referència en Economia Aplicada (XREAP)

Abstract: The dilemma efficiency versus equity, together with political partisan interests, has received increasing attention to explain the territorial allocation of investments. However, centralization intended to introduce or reinforce hierarchization in the political system has not been object as of now of empirical analysis. Our main contribution to the literature is providing evidence that meta-political objectives related to the ordering of political power and administration influence regional investment. In this way, we find evidence that network mode’s (roads and railways) investment programs are influenced by the centralization strategy of investing near to the political capital, while investment effort in no-network modes (airports and ports) appears to be positively related to distance. Since investment in surface transportation infrastructures is much higher than that in airports and ports, and taken into account that regions surrounding the political capital are poorer than the average, we suggest that centralization rather than redistribution has been the driver for the concentration of public investment on these regions.

Keywords: Investment; infrastructures; centralization; redistribution (search for similar items in EconPapers)
Pages: 31 pages
Date: 2010-12, Revised 2010-12
New Economics Papers: this item is included in nep-geo, nep-pbe and nep-ure
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Citations: View citations in EconPapers (4) Track citations by RSS feed

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http://www.xreap.cat/RePEc/xrp/pdf/XREAP2010-15.pdf First version, 2010 (application/pdf)
http://www.xreap.cat/RePEc/xrp/pdf/XREAP2010-15.pdf Revised version, 2010 (application/pdf)

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