Does Institutional Quality Matter for Infrastructure Provision? A Non-parametric Analysis for Italian Municipalities
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Does Institutional Quality Matter for Infrastructure Provision? A Non‑parametric Analysis for Italian Municipalities Marina Cavalieri1 · Calogero Guccio1 · Domenico Lisi1 · Ilde Rizzo1 Received: 22 January 2019 / Accepted: 14 September 2019 © Società Italiana degli Economisti (Italian Economic Association) 2019
Abstract This study explores the relationship between different dimensions of regional institutional quality and the efficient provision of transport infrastructure. A two-stage semi-parametric approach is applied to a large sample of public works procured by about 1700 Italian municipalities in the 2000–2014 period. First, we estimate the performance in contract execution; then, we test the impact of different measures and dimensions of institutional quality at both regional and provincial level. The results provide evidence that the quality of institutional environment matters in infrastructure procurement, though some specific dimensions of institutional quality appear to be more relevant than others in affecting performance in contract execution. Overall, the estimates are robust to alternative measures of institutional quality, alternative model specifications, and different sample selections. Keywords Efficiency · Non-parametric methods · Semi-parametric truncated regression · Municipalities · Institutional quality · Public works contracts JEL Classification O18 · D73 · H57 · C14
1 Introduction Public procurement is a matter of intensive discussion globally because of the large amount of public resources involved and the problems related to its performance.1 Indeed, public works are often a prerequisite for public and private investments that are important for the accumulation of economic and social capital in local territories. 1 The Organization for Economic Co-operation and Development (OECD) estimates that public procurement accounts for 29% of general government expenditure; 63% of total procurement spending across OECD countries pertains to state and local governments (OECD 2015).
* Calogero Guccio [email protected] 1
Department of Economics and Business, University of Catania, Catania, Italy
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There is a growing body of literature showing that infrastructure development contributes significantly to economic growth, though there seems to be a mutual feedback between economic and infrastructure development (Crescenzi and Rodríguez-Pose 2012; Sahoo and Dash 2012; Donaldson 2017; Mohmand et al. 2017).2 According to the Global Competitiveness Report, infrastructure is one of the pillars affecting the competitiveness of a country; this is especially so in Italy, which is ranked twenty-fifth for the infrastructure pillar, well below most other developed countries (World Economic Forum 2016). Another part of literature also points out the importance of institutional quality in determining the return on transport infrastructure investment (Crescenzi et al. 2016). In general, the efficient provision of infrastructure and its capability to deliver pla
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