Is there any relationship between public investment and economic growth in the spanish regions? (original) (raw)

This paper offers an introduction to the empirical relationships between public investment and regional economic growth in Spain over the period 1965-1995. We use a neoclassical theoretical framework for two regions with public capital subject to congestion and spillover effects from infrastructure situated in neighbouring regions. Next we derive a convergence equation that is estimated using panel data techniques. This enables us to control unobserved specific characteristics; furthermore, we take account of possible endogeneity problems. Our provisional results suggest that public investment has not played an important role in regional growth rates during period specified.