Infrastructure in the framework of production functions: evidence of EU member states at the regional level
Abstract
Infrastructure development is seen as an essential tool for boosting economic growth. Infrastructure is funded under various programs to contribute to economic growth, and reduce regional disparities. Evaluations of the results achieved have to be carried out to develop efficient infrastructure development and investment allocation policy. This is highlighted in both the reports of policymakers and scientific publications. The main limitation of these studies is that they focus on assessing the return on infrastructure development at the national level, leaving the question of what outcomes were achieved at the regional level. This article aims to evaluate the economic outcomes of transport and ICT infrastructure development at the NUTS 2 regional level in the EU-28 countries, using 2000–2019 data. The research is based on the neoclassical production function complementing it with an infrastructure indicator. Based on previous research, it is hypothesized that economic outcomes may depend on the institutional environment of the region. Consequently, the research model specification is supplemented by government quality as a possible moderator. Research findings suggest just motorway and internet infrastructure are significantly positively related to production outcomes. Estimations show higher government quality and less corruption are related to the bigger production output of the infrastructure input.
Keyword : infrastructure, infrastructure development, transport infrastructure, telecommunication infrastructure, production function, economic outcomes
How to Cite
Mačiulytė-Šniukienė, A., Butkus, M., & Szarucki, M. (2022). Infrastructure in the framework of production functions: evidence of EU member states at the regional level. Technological and Economic Development of Economy, 28(6), 1897–1914. https://doi.org/10.3846/tede.2022.18090
This work is licensed under a Creative Commons Attribution 4.0 International License.
References
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Boopen, S. (2006). Transport infrastructure and economic growth: Evidence from Africa using dynamic panel estimates. The Empirical Economics Letters, 5(1), 37–52.
Canning, D., & Pedroni, P. (2004). The effects of infrastructure on long run economic growth (Working Paper 2004-04). Department of Economics, Williams College.
Charron, N., Lapuente, V., & Bauhr, M. (2021). Sub-national quality of government in EU Member States: Presenting the 2021 European Quality of Government Index and its relationship with Covid-19 indicators (The QoG Working Paper Series 2021:4). University of Gothenburg.
Chen, Z., & Li, X. (2021). Economic impact of transport infrastructure investment under the Belt and Road Initiative. Asia Europe Journal, 19(1), 131–159. https://doi.org/10.1007/s10308-021-00617-3
Cigu, E., Agheorghiesei, D. T., Gavriluta (Vatamanu), A. F., & Toader, E. (2019). Transport infrastructure development, public performance and long-run economic growth: A case study for the Eu-28 countries. Sustainability, 11(1), 67. https://doi.org/10.3390/su11010067
Crescenzi, R., & Rodríguez-Pose, A. (2012). Infrastructure and regional growth in the European Union. Papers in Regional Science, 91(3), 487–513. https://10.1111/j.1435-5957.2012.00439.x
De Clercq, M., D’Haese, M., & Buysse, J. (2021). Fixed Broadband coverage in European rural areas, In PAN-European assessment report (pp. 20–34). DESIRA. https://desira2020.eu/wp-content/uploads/2021/03/D2.1-Pan-European-Assessment-Report.pdf
Donou-Adonsou, F., Lim, S., & Mathey, S. A. (2016). Technological progress and economic growth in Sub-Saharan Africa: Evidence from telecommunications infrastructure. International Advances in Economic Research, 22, 65–75. https://doi.org/10.1007/s11294-015-9559-3
Elburz, Z., & Cubukcu, K. M. (2021). Spatial effects of transport infrastructure on regional growth: The case of Turkey. Spatial Information Research, 29, 19–30. https://doi.org/10.1007/s41324-020-00332-y
European Commission. (2014). European economy. Infrastructure in the EU: Developments and impact on growth (Occasional Papers 203). Brussels, Belgium.
European Commission. (2021). The Global Gateway. Brussels, Belgium. https://ec.europa.eu/info/sites/default/files/joint_communication_global_gateway.pdf
European Commission. (n.d.). Infrastructure and transport. https://ec.europa.eu/international-partnerships/topics/infrastructure-and-transport_en
Fazekas, M., & Tóth, B. (2018). The extent and cost of corruption in transport infrastructure. New evidence from Europe. Transport Research Part A, 113, 35–54. https://doi.org/10.1016/j.tra.2018.03.021
Fourie, J. (2006). Economic infrastructure: A review of definitions, theory and empirics. South African Journal of Economics, 74(3), 530–556. https://doi.org/10.1111/j.1813-6982.2006.00086.x
Haftu, G. G. (2019). Information communications technology and economic growth in Sub-Saharan Africa: A panel data approach. Telecommunication Policy, 43(1), 88–99. https://doi.org/10.1016/j.telpol.2018.03.010
Hou, Z., Jin, M., & Kumbhakar, S. C. (2020). Productivity spillovers and human capital: A semiparametric varying coefficient approach. European Journal of Operational Research, 287(1), 317–330. https://doi.org/10.1016/j.ejor.2020.04.039
Kallal, R., Haddaji, A., & Ftiti, Z. (2021). ICT diffusion and economic growth: Evidence from the sectorial analysis of a periphery country. Technological Forecasting & Social Change, 162, 120403. https://doi.org/10.1016/j.techfore.2020.120403
Kyriacou, A. P., Muinelo-Gallo, L., & Roca-Sagalés, O. (2019). The efficiency of transport infrastructure investment and the role of government quality: An empirical analysis. Transport Policy, 74, 93–102. https://doi.org/10.1016/j.tranpol.2018.11.017
Lenz, N. V., Skender, H. P., & Mirković, P. A. (2018). The macroeconomic effects of transport infrastructure on economic growth: The case of Central and Eastern EU member states. Economic Research-Ekonomska Istraživanja, 31(1), 1953–1964. https://doi.org/10.1080/1331677X.2018.1523740
Lin, T.-Y., & Chiu, S.-H. (2018). Sustainable performance of low-carbon energy infrastructure investment on regional development: Evidence from China. Sustainability, 10(12), 4657. https://doi.org/10.3390/su10124657
Maciulyte-Sniukiene, A., & Butkus, M. (2022). Does infrastructure development contributes to EU countries’ economic growth? Sustainability, 14(9), 5610. https://doi.org/10.3390/su14095610
Maparu, T. S., & Mazumder, T. N. (2017). Transport infrastructure, economic development and urbanization in India (1990–2011): Is there any causal relationship? Transport Research Part A, 100, 319–336. https://doi.org/10.1016/j.tra.2017.04.033
Meersman, H., & Nazemzadeh, M. (2017). The contribution of transport infrastructure to economic activity: The case of Belgium. Case Studies on Transport Policy, 5(2), 316–324. https://doi.org/10.1016/j.cstp.2017.03.009
Mitra, A., Sharma, C., & Véganzonès-Varoudakis, M.-A. (2016). Infrastructure, information & communication technology and firms’ productive performance of the Indian manufacturing. Journal of Policy Modeling, 38(2), 353–371. https://doi.org/10.1016/j.jpolmod.2016.02.013
Nair, M., Pradhan, R. P., & Arvin, M. B. (2020). Endogenous dynamics between R&D, ICT and economic growth: Empirical evidence from the OECD countries. Technology in Society, 62, 101315. https://doi.org/10.1016/j.techsoc.2020.101315
Ogbeinfun, L., & Shobande, O. A. (2021). A reevaluation of human capital accumulation and economic growth in OECD. Journal of Public Affairs, e02602. https://doi.org/10.1002/pa.2602
Olczyk, M., & Kuc-Czarnecka, M. (2022). Digital transformation and economic growth – DESI improvement. Technological and Economic Development of Economy, 28(3), 775–803. https://doi.org/10.38446/tede/2022.16766
Oyeniran, W. I., & Onikosi-Alliyu, S. (2016). Information and telecommunication infrastructure and economic growth: An experience from Nigeria. Serbian Journal of Management, 11(2), 275–289. https://doi.org/10.5937/sjm11-8174
Oláh, J., Nestler, S., Nobel, T., & Popp, J. (2018). International characteristics of the macro-logistics system of freight villages. Periodica Polytechnica Transportation Engineering, 46(4), 194–200. https://doi.org/10.3311/PPtr.11656
Palei, T. (2015). Assessing the impact of infrastructure on economic growth and global competitiveness. Procedia Economics and Finance, 23, 168–175. https://doi.org/10.1016/S2212-5671(15)00322-6
Pohjola, M. (2000). Information technology and economic growth: A cross-country analysis (WIDER Working Paper No. 173). The United Nations University & World Institute for Development Economic Research.
Pradhan, R. P., Mallik, G., & Bagchi, T. P. (2018). Information communication technology (ICT) infrastructure and economic growth: A causality evinced by cross-country panel data. IIMB Management Review, 30(1), 91–103. https://doi.org/10.1016/j.iimb.2018.01.001
Saidi, M., Shahbaz, M., & Akhtar, P. (2018). The long-run relationships between transport energy consumption, transport infrastructure, and economic growth in MENA countries. Transport Research Part A, 111, 78–95. https://doi.org/10.1016/j.tra.2018.03.013
Toader, E., Firtescu, B. N., Roman, A., & Anton, S. G. (2018). Impact of information and communication technology infrastructure on economic growth: An empirical assessment for the EU countries. Sustainability, 10(10), 3750. https://doi.org/10.3390/su10103750
Wang, C., Lim, M. K., Zhang, X., Zhao, L., & Lee, P. T.-W. (2020b). Railway and road infrastructure in the Belt and Road Initiative countries: Estimating the impact of transport infrastructure on economic growth. Transportation Research Part A, 134, 288–307. https://doi.org/10.1016/j.tra.2020.02.009
Wang, N., Zhu, Y., & Yang, T. (2020a). The impact of transportation infrastructure and industrial agglomeration on energy efficiency: Evidence from China’s industrial sectors. Journal of Cleaner Production, 244, 118708. https://doi.org/10.1016/j.jclepro.2019.118708
World Economic Forum. (2020). The Impact of 5G: Creating new value across industries and society. PwC Global. Geneva, Switzerland.
Yang, F., Zhang, S., & Sun, C. (2020). Energy infrastructure investment and regional inequality: Evidence from China’s power grid. Science of the Total Environment, 749, 142384. https://doi.org/10.1016/j.scitotenv.2020.142384
Zachariadis, I. (2018). Investment in infrastructure in the EU: Gaps, challenges, and opportunities. European Parliamentary Research Service. https://www.europarl.europa.eu/RegData/etudes/BRIE/2018/628245/EPRS_BRI(2018)628245_EN.pdf
Zergawu, Y. Z., Walle, Y. M., & Giménez-Gomez. (2020). The joint impact of infrastructure and institutions on economic growth. Journal of Institutional Economics, 16(4), 481–502. https://doi.org/10.1017/S1744137420000016
Zhang, X. (2008). Transport infrastructure, spatial spillover and economic growth: Evidence from China. Frontiers of Economics in China, 3(4), 585–597. https://doi.org/10.1007/s11459-008-0029-1