Does public investment contribute to regional convergence?

: an econometric approach to the portuguese regions (NUTS III)

Abstract

The main objective of this present Master dissertation is to analyze the process of convergence among Portuguese Regions at NUTS III level over 1988-2005 period and the potential contribution of regional public investment allocation to that process. To meet this goal the regional per capita GVA average growth rate was used as well as a proxy of the public investment variable based namely on the Community Support Frameworks expenditure. s-convergence and b-convergence neoclassic growth model hypothesis were applied in a context of a panel data analysis methodology. The results show evidence of regional convergence, that is, faster per capita GVA growth in the poorest regions, during the global period, although Portuguese regions remain quite asymmetric in terms of that indicator. This result was not verified for all of the three sub-periods considered. However on the main question of this thesis data did not show a significant statistical relation between public investment and per capita GVA average growth rate. The public investment allocation was not such as to privilege the reduction of asymmetries and the result was that the investment channeled to the poorest regions did not have a significant effect on the growth. In spite the fact that Portuguese Government has been investing considerably on infrastructures programs and used public investment variable to promote economic growth, it is not possible to assure that its allocation has really contributed to reduce the asymmetries among its NUTS III regions

Date of Award	2013
Original language	English
Awarding Institution	Universidade Católica Portuguesa
Supervisor	Isabel Horta Correia (Supervisor) & Pedro Raposo (Co-Supervisor)