Rovolis, Antonios
(1989)
Effects of public infrastructure capital on the economic development and productivity of the metropolitan and peripheral regions of Greece: 1976-1992.
PhD thesis, London School of Economics and Political Science.
Abstract
The relationship between economic development and public infrastructure capital has puzzled economists, economic geographers, planners, and other social scientists, for many years. This thesis presents an attempt to theorise and conduct empirical research on this field in the context of a developing economy within the European Union - Greece. Key to understanding the work undertaken in this thesis is the wider theoretical and applied research, which has flourished in the US and other countries during the last decade. The thesis examines the effects of public capital investment on Greek economic development viewed at different spatial scales. More specifically, it explores the role of infrastructure spending at national, regional, and urban (metropolitan area of Athens) levels. The empirical presentation begins with a description of the Public Investment Programme from 1976 onwards. This is the main channel for public investment in infrastructure capital in Greece. Its various public capital sub-categories have been aggregated into two basic types, 'productive' and 'social' infrastructure. The next step was to utilise a production function analytical framework and panel data analysis to explore the direct and network effects of infrastructure investment on manufacturing industry. Positive effects of infrastructure spending are apparent. An alternative approach, cost function analysis, is deployed in the second major empirical section. Using various spatial levels, the role of public capital on the private costs of production can be examined by the calibration of a cost function for industrial sectors. The results show that infrastructure investment reduces private costs in manufacturing at most spatial levels. Finally, the thesis investigates other direct and indirect channels by which public capital can affect the non-manufacturing and manufacturing sectors of the private economy. The empirical findings show that there is no significant infrastructure impact on the former sector, whereas there are mixed results for the indirect channels on manufacturing. It can be safely argued that the public capital and regional development relationship is a complex one, especially as infrastructure effects can be different at different spatial levels.
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