No. 126. ECONOMIC GROWTH IN GREECE: MEDIUM TERM TRENDS AND FUTURE PROSPECTS
S. Papaioannou. 2012.
The public-sector investment decision-making processes typically involve multiple and interrelated sectoral and regional policy objectives and budget constraints. These interrelationships may have a significant effect on future state funding needs and the strategic assessment of infrastructure development at the country level. This paper presents a dynamic spatio-economic model that considers both intra- and inter-sectoral investment dependencies under various types of budget constraints. The study employs the rich database of the Monitoring Information System of the Greek government concerning all public investment projects co-funded by the European Commission at the Prefecture level in the decade 2000-2009. The expenditure allocation dynamics of most types of public investment are found to be competitive with each other, due to lack of coordination, technological and budgetary constraints, geographical factors, and equity and political considerations. The deviations from criteria of economic efficiency rely on the timing, location and type of investment. There is evidence of significant scale effects and only limited and mostly asymmetric complementarities among the expenditures in public transport modes, and between those in energy and transport, information and communication technologies and R&D projects, and the agri-food sector and the other sectors.