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Contribution to Productivity or Pork Barrel?: The Two Faces of Infrastructure Investment

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  • Olivier Cadot
  • Lars-Hendrik Röller
  • Andreas Stephan

Abstract

This paper proposes a simultaneous-equation approach to the estimation of the contribution of transport infrastructure accumulation to regional growth. We model explicitly the political-economy process driving infrastructure investments; in doing so, we eliminate a potential source of bias in production-function estimates and generate testable hypotheses on the forces that shape infrastructure policy. Our empirical findings on a panel of France's regions over 1985-92 suggest that electoral concerns and influence activities were, indeed, significant determinants of the cross-regional allocation of transportation infrastructure investments. By contrast, we find little evidence of concern for the maximization of economic returns to infrastructure spending, even after controlling for pork-barrel.

Suggested Citation

  • Olivier Cadot & Lars-Hendrik Röller & Andreas Stephan, 2004. "Contribution to Productivity or Pork Barrel?: The Two Faces of Infrastructure Investment," Discussion Papers of DIW Berlin 458, DIW Berlin, German Institute for Economic Research.
    • Handle: RePEc:diw:diwwpp:dp458
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    More about this item

    Keywords

    Growth; Infrastructure; Political economy; Lobbying; France;
    All these keywords.

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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