Is it Redistribution or Centralization? On the Determinants of Government Investment in Infrastructure

The efficiency-equity dilemma, in conjunction with political partisan interests, has received increasing attention in attempts to explain the territorial allocation of investment. However, centralization policies that seek to introduce or reinforce the hierarchization of the political system have, as yet, to be subject to empirical analysis. The main contribution of this paper, therefore, is that it provides evidence that meta-political objectives concerning the organization of political and administrative power do influence regional investment. Using data from Spain, we demonstrate that investment programs in network modes (i.e., roads and railways) are influenced by the centralization strategy of investing in regions near the state's political capital, while investment efforts in non-network modes (i.e., airports and ports) appear to be positively related to distance to the capital. Since investment in surface network transportation infrastructure is much higher than that in airports and ports, and taking into account that the regions surrounding the political capital are poorer than the state's average, we suggest that centralization rather than redistribution has been the driver behind the concentration of public investment in these regions