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We quantify the general equilibrium effects on economic growth of improving the quality of institutions at the regional level in the context of the implementation of the European Cohesion Policy for the European Union and the UK. The direct impact of changes in the quality of government is integrated in a general equilibrium model to analyse the system‐wide economic effects resulting from additional endogenous mechanisms and feedback effects. The results reveal a significant direct effect as well as considerable system‐wide benefits from improved government quality on economic growth. A small 5 per cent increase in government quality across European Union regions increases the impact of Cohesion investment by up to 7 per cent in the short run and 3 per cent in the long run. The exact magnitude of the gains depends on various local factors, including the initial endowments of public capital, the level of government quality, and the degree of persistence over time. [ABSTRACT FROM AUTHOR]

Economic growth in China in recent decades has largely rested on the dynamism of its cities. High economic growth has coincided with measures aimed at improving the efficiency of local governments and with a mounting political drive to curb corruption. Yet the connection between government institutions and urban growth in China remains poorly understood. This paper is the first to look into the link between government efficiency and corruption, on the one hand, and urban growth in China, on the other hand and to assess what is the role of institutions relative to more traditional factors for economic growth in Chinese cities. Using panel data for 283 cities over the period between 2003 and 2014, the results show that the urban growth in China is a consequence of a combination of favorable human capital, innovation, density, local conditions, foreign direct investment, and city‐level government institutions. Both government quality—especially for those cities with the best governments—and the fight against corruption at the city level have a direct effect on urban growth. Measures to tackle corruption at the provincial level matter in a more indirect way, by raising or lowering the returns of other growth‐inducing factors. [ABSTRACT FROM AUTHOR]

This paper estimates the impact of public investment on regional economic growth and convergence at the NUTS 3 level in Greece. Using a new database of public expenditure per region for the period 1978-2007, it proposes a model which captures not just the impact of public investment in Greek prefectures, but also the spillover effects related to the existence of externalities from neighbouring regions. The results point to a positive long-run impact of public investment per capita on regional economic growth - but not on convergence - which also generates considerable spillover effects. However, the returns vary according to different types of public investment, with education and infrastructure spillovers having the highest impact. In general, public investment externalities seem to be more relevant for regional growth than direct public investment in each region. Finally, the impact of different types of public investment in Greece is mediated by politics and political factors, but the effect of politics disappears once we control for political-period-specific spatial-invariant variables. Resumen Este artículo estima el impacto de la inversión pública en el crecimiento económico regional y la convergencia a nivel NUTS 3 en Grecia. Haciendo uso de una nueva base de datos de gasto público por región para el periodo 1978-2007, se propone un modelo que identifica no solamente el impacto de la inversión pública en las prefecturas griegas, sino también los efectos de spillover relacionados con la existencia de externalidades procedentes de regiones vecinas. Los resultados apuntan a un impacto positivo a largo plazo de la inversión pública per cápita en el crecimiento económico regional - pero no en la convergencia - el cual genera unos efectos de spillover considerables. Sin embargo, los retornos varían de acuerdo con los diferentes tipos de inversión pública, siendo la educación y los spillovers de infraestructura los de mayor impacto. En general, las externalidades de inversión pública parecen tener una mayor relevancia para el crecimiento regional que la inversión pública directa en cada región. Para terminar, el impacto de los diferentes tipos de inversión pública en Grecia se ve influido por sus políticas y otros factores políticos, pero el efecto de las políticas desaparece una vez que se controlan las variables espacialmente-invariantes de tipo político ligadas a un periodo específico. [ABSTRACT FROM AUTHOR]

Transport infrastructure has represented one of the cornerstones of development and cohesion strategies in the European Union (EU) and elsewhere in the world. However, despite the considerable funds devoted to it, its impact remains controversial. This paper revisits the question of to what extent transport infrastructure endowment - proxied by regional motorways - has contributed to regional growth in the EU between 1990 and 2004. It analyses infrastructure in relationship to other factors which may condition economic growth, such as innovation, migration, and the local 'social filter', taking also into account the geographical component of intervention in transport infrastructure and innovation. The results of the two-way fixed-effect (static) and difference GMM (dynamic) panel data regressions indicate that infrastructure endowment is a relatively poor predictor of economic growth and that regional growth in the EU results from a combination of an adequate 'social filter', good innovation capacity, both in the region and in neighbouring areas, and a region's capacity to attract migrants. The meagre returns of infrastructure endowment on economic growth raise interesting questions about the opportunity costs of further infrastructure investments across most of Western Europe. Resumen La infraestructura de transporte ha venido siendo una de las piedras angulares de las estrategias de desarrollo y cohesión en la Unión Europea ( UE) y el resto del mundo. Sin embargo, y a pesar de los considerables recursos que se le ha dedicado, su impacto es un tema controvertido. Este artículo revisa el interrogante de hasta que punto ha contribuido la dotación de infraestructura de transporte - representada por las autopistas regionales - al crecimiento regional en la UE entre 1990 y 2004. Se analiza la infraestructura en relación a otros factores que podrían condicionar el crecimiento económico, como la innovación, la migración, y el 'filtro social' local, teniendo en cuenta asimismo el componente geográfico de la intervención en la infraestructura de transporte y la innovación. Los resultados de las regresiones de datos de panel de efectos fijos (método estático) de doble vía y MGM por diferencias (método dinámico) indican que la dotación de infraestructura es un pobre indicador del crecimiento económico y que el crecimiento regional en la UE tiene su origen en una combinación de un 'filtro social' adecuado, en una buena capacidad innovadora tanto en la región como en áreas vecinas, y en la capacidad de la región de atraer migración. Los escasos retornos para el crecimiento económico de la dotación de infraestructura suscitan cuestiones interesantes sobre los costos de oportunidad de futuras inversiones en infraestructura para la mayoría de Europa Occidental. [ABSTRACT FROM AUTHOR]