Infrastructure investment in Portugal and the traded/non-traded industry mix

Alfredo Marvao Pereira; Rui Manuel Pereira

doi:10.24294/jipd.v4i1.1124

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Infrastructure investment in Portugal and the traded/non-traded industry mix

Alfredo Marvao Pereira

Rui Manuel Pereira

Journal of Infrastructure Policy and Development 2020, 4(1), 1124; https://doi.org/10.24294/jipd.v4i1.1124

Submitted：17 Jun 2019

Accepted：25 Jul 2019

Published：30 Mar 2020

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Abstract

Using a newly-developed data set for Portugal, we analyze the industry-level effects of infrastructure investment. Focusing on the divide between traded and non-traded industries, we find that infrastructure investments have a non-traded bias, as these shift the industry mix towards private and public services. We also find that the industries that benefit the most in relative terms are all non-traded: construction, trade, and real estate, among the private services, and education and health, among the public services. Similarly, emerging trading sectors, such as hospitality and professional services, stand to gain. The positive impacts on traded industries are too small to make a difference. These results highlight that infrastructure-based strategies are not neutral in terms of the industry mix. Moreover, with most of the benefits accruing to non-traded industries, such a development model that is heavily based on domestic demand may be unsustainable in light of Portugal’s current foreign account position.

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References

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