Infrastructure and Growth in a Spatial Framework: Evidence from the EU regions

Abstract

This paper examines the return to infrastructure in the European Union regions in a spatial framework. It innovates on the earlier literature on infrastructure and growth by a combination of regional focus, disaggregation of infrastructure types and consideration of spatial dependence. Different types of infrastructure capital are considered as determinants of economic performance at the Nomenclature des Unités Territoriales Statistiques level. To account for growth spillovers among regions, a spatial Durbin model is estimated. The results confirm the important role of infrastructure and identify the highest rates of return as associated with telecommunication, quality and accessibility of transportation networks, with a positive impact of roads and railways.