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Efficiency or Equity? Determinants of Regional Allocation of Infrastructure Investment in the Republic of Korea

효율성인가, 형평성인가? 한국 인프라투자 지역 배분의 결정요인

Lee, Jongyearn

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Abstract

We used a structural model to determine which aspects of efficiency and equity criteria were advocated in allocating investment in transportation infrastructure by region in the Republic of Korea during the period of 2001–2014. The estimation by the generalized method of moments indicated that the country’s regional allocation of public investment favored equity enhancement rather than efficiency gain. Empirical findings also include evidence of the substitutionary relationship between the investments by the central and regional governments, as well as the excess capital stock of transportation infrastructure compared with the optimum. The infrastructure needs and regional financial conditions had limited effects on the past allocation of investment. Political influence was exerted with respect to electoral productivity rather than partisanship.

Issue Date
2022-01
Publisher
The Korean Economic Association
Keywords(Author)
Equity–Efficiency Trade-off; Transportation Infrastructure; Public Investment; Political Economy; 효율성-형평성 간 상충관계; 교통인프라; 공공투자; 정치경제
DOI
10.22841/kerdoi.2022.38.1.003
Journal Title
The Korean Economic Review
Start Page
73
End Page
108
ISSN
0254-3737
Language
English
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