REGIONAL ECONOMIC TRANSFORMATION AND SOCIAL OVERHEAD INVESTMENTS

A methodological and applicable framework for empirically assessing the impacts of social overhead investments (or infrastructure investments) on the development of a region in terms of its investment and employment levels is presented. The paper gives a concise overview of various theories and methods and puts forward the Tinbergen hypothesis that programme effects of infrastructure are far more important than direct and indirect expenditure (i.e., construction) effects. A brief discussion of impacts regarding various infrastructure compartments will be given, mainly seen from a macro-perspective. Then - in view of the lack of data for regional infrastructure programme impact studies - a set of three regions in the Netherlands is thoroughly analysed on the basis of a survey of industrial firms and interviews with experts/planners. Contingency table analysis is used to identify direct and indirect links between infrastructure compartments and various types of firms. It is concluded that social overhead capital does exert a significant impact on regional business life. Apparently, the regional production environment is a critical success factor for economic development.