Railroad infrastructure investment and economic performance in Portugal

An industry-specific analysis

Bibliographic Data

ID22190036
AuthorsPedro G Rodrigues (0000-0002-8970-1529, University of Lisbon), Alfredo M Pereira (0000-0003-1381-0937, William & Mary), Rui M Pereira (0000-0001-6547-2437, William & Mary)
Year2023
Volume8
Issue2
Pages2942
Publication date2023-12-19
Peer ReviewedYes
Open AccessYes
TypeARTICLE
VenueJournal of Infrastructure Policy and Development (JOURNAL)
Journal identifiersISSN: 2572-7923 • E-ISSN: 2572-7931
PublisherEnPress Publisher (PUBLISHER)
DOI10.24294/jipd.v8i2.2942
OpenAlexW4389940175
LanguageEN
Citations received2
References cited40

This study addresses the crucial question of the macroeconomic impact of investing in railroad infrastructure in Portugal. The aim is to shed light on the immediate and long-term effects of such investments on economic output, employment, and private investment, specifically focusing on interindustry variations. We employ a Vector Autoregressive (VAR) model and utilize industry-level data to estimate elasticities and marginal products on these three economic indicators. Our findings reveal a compelling positive long-term spillover effect of these investments. Specifically, every €1 million in capital spending results in a €20.84 million increase in GDP, a €17.78 million boost in private investment, and 72 new net permanent jobs. However, these gains are not immediate, as only 14.5% of the output increase and 38.8% of the investment surge occur in the first year. In contrast, job creation is nearly instantaneous, with 93% of new jobs materializing within the first year. A short-term negative impact on the trade balance is expected as new capital goods are imported. Upon industry-level analysis, the most pronounced output increases are witnessed in the real estate, construction, and wholesale and retail trade industries. The most substantial net job creation occurs in the construction, professional services, and hospitality industries. This study enriches the empirical literature by uncovering industry-specific impacts and temporal macroeconomic effects of railroad infrastructure investments. This underscores their dual advantage in bolstering long-term economic performance and counteracting job losses during downturns, thus offering valuable public policy implications. Notably, these benefits are not evenly distributed across all industries, necessitating strategic sectoral planning and awareness of employment agencies to optimize spending programs and adapt to industry shifts

Business · Economic impact analysis · Economics · Labour economics · Macroeconomics · Microeconomics · Real estate · Spillover effect · Maritime Ports and Logistics · Transport and Economic Policies · Finance

Tools

Open DOIOpen Access