Contribution to productivity or pork barrel? The two faces of infrastructure investment

This paper proposes a simultaneous-equation approach to the estimation of the contribution of transport infrastructure accumulation to regional growth. We model explicitly the political-economy process driving infrastructure investments; in doing so, we eliminate a potential source of bias in production-function estimates and generate testable hypotheses on the forces that shape infrastructure policy. Our empirical findings on a panel of France’s regions over 1985-92 suggest that electoral concerns and influence activities were, indeed, significant determinants of the crossregional allocation of transportation infrastructure investments. By contrast,we find little evidence of concern for the maximization of economic returns to infrastructure spending, even after controlling for pork-barrel.