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Public investment and regional growth and convergence: evidence from Greece

Rodríguez-Pose, Andrés and Psycharis, Yiannis and Tselios, Vassilis (2012) Public investment and regional growth and convergence: evidence from Greece. Papers in Regional Science, 91 (3). pp. 543-568. ISSN 1056-8190

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Identification Number: 10.1111/j.1435-5957.2012.00444.x

Abstract

This paper estimates the impact of public investment on regional economic growth and convergence at the NUTS 3 level in Greece. Using a new database of public expenditure per region for the period 1978-2007, it proposes a model which captures not just the impact of public investment in Greek prefectures, but also the spillover effects related to the existence of externalities from neighbouring regions. The results point to a positive long-run impact of public investment per capita on regional economic growth - but not on convergence - which also generates considerable spillover effects. However, the returns vary according to different types of public investment, with education and infrastructure spillovers having the highest impact. In general, public investment externalities seem to be more relevant for regional growth than direct public investment in each region. Finally, the impact of different types of public investment in Greece is mediated by politics and political factors, but the effect of politics disappears once we control for political-period-specific spatial-invariant variables.

Item Type: Article
Official URL: http://onlinelibrary.wiley.com/journal/10.1111/%28...
Additional Information: © 2012 The Authors
Subjects: H Social Sciences > HC Economic History and Conditions
H Social Sciences > HJ Public Finance
JEL classification: R - Urban, Rural, and Regional Economics > R1 - General Regional Economics > R11 - Regional Economic Activity: Growth, Development, and Changes
R - Urban, Rural, and Regional Economics > R1 - General Regional Economics > R12 - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade
R - Urban, Rural, and Regional Economics > R5 - Regional Government Analysis > R53 - Public Facility Location Analysis; Public Investment and Capital Stock
R - Urban, Rural, and Regional Economics > R5 - Regional Government Analysis > R58 - Regional Development Policy
Sets: Departments > European Institute
Departments > Geography and Environment
Research centres and groups > Spatial Economics Research Centre
Date Deposited: 23 Jul 2012 14:00
Last Modified: 22 Aug 2012 15:12
Projects: Prociudad-CM programme, UK Spatial Economics Research Centre
Funders: European Research Council under the European Union's Seventh Framework Programme (FP7/2007-2013)/ERC grant agreement no 269868, Leverhulme Trust Major Research Fellowship
URI: http://eprints.lse.ac.uk/id/eprint/44917

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