The Effects of Public Capital on the Growth in Spanish Productivity

Abstract

The aim of the article is to provide new evidence concerning the effect of public capital on productivity growth in Spain. To this end, the article follows the growth accounting approach, which, in addition to measuring both the direct and indirect effects of public capital on the total factor productivity, allows for assessing whether there is a distinctive impact of public capital across economic sectors. The results lead to three main conclusions: (1) Public capital has a strong influence on growth when we use data from the whole economy; (2) this influence varies across sectors, being more relevant in the exposed sectors (industry) than in sheltered sectors (agriculture, construction, and services); and (3) irrespective of the definition used for public capital, these basic results remain unchanged. (JEL "C30", "E62", "H54", "O47", "O52") Copyright 2003 Western Economic Association International.