A spatial autoregressive panel model to analyze road network spillovers on production

The production function approach is used to introduce the effect of public infrastructure on economic growth focusing on its spillover effects. We improve the existing literature both from a conceptual and methodological perspective. As regressors we incorporate variables related to the new concepts of internal and imported transport infrastructure capital stocks, which are actually used in commercial flows, calculated by network analysis performed in GIS. The internally used capital stock represents own infrastructure that benefits accessing markets within the region itself, while the imported capital stock captures the spillover effect associated to the use of the infrastructure situated in neighboring regions. From a methodological perspective, we introduce spatial interdependence into these models, applying the most recent spatial econometric techniques based on instrumental variables estimation in spatial autoregressive panel models in comparison with Maximum Likelihood estimation methods. We illustrate the methodology with Spanish provincial panel data for the period 1980-2007. Results support the hypothesis that the imported capital has a positive spillover effect on production. (C) 2016 Elsevier Ltd. All rights reserved.