Public Infrastructure Investment and Efficiency in Italian Regions

Evidence on growth rates in per capita income of Italian regions reveals persistent differences in development patterns between North and South Italy. While Northern regions manage to sustain high growth rates, Southern regions stagnate in low growth traps. To explain the phenomenon of different long-term growth paths, we use the stochastic frontier approach which allows to discriminate between the channels through which public infrastructure influences overall productivity. The main results are that the impact of core-infrastructure investment on efficiency is always positive. The impact of non-core infrastructure on efficiency is negative in the South and positive in the North.