PLANNING FOR A SUSTAINABLE EUROPE? - TU Berlin

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distant from the actual project. These spillover benefits, it was believed, could be
demonstrated by taking a more network-oriented approach, that looks at how a particular
road (or rail) investment changes accessibility dynamics in other parts of the road (or rail)
network. The argument obviously has large political implications. If a general
relationship between infrastructure investment and economic wealth could be plausibly
demonstrated, then an expanded government role in stimulating investment into public
capital was justified. The narrower neo-classical approaches that focus on cost-benefit
analyses at the project level then could be said to underestimate the economic effects of
public investments.
In the specific context of the US, Aschauer, and others after him, argued that the
downturn in economic productivity in the US in the early 1970s could largely be
explained by the overall decrease in (public) infrastructure investment since the mid-
1960s. Consequently, they argued, only a pro-public investment approach would be able
to bring growth rates in the US back up to previous levels. So the supposed positive
relationship between increases in public infrastructure stock and the productivity of
private sector capital was largely asserted through negative deduction. Aschauer’s
conclusions were immediately contradicted by a number of authors, both on empirical
and more ideological grounds. Interestingly, while several authors arrived at similar
results as Aschauer, Ford and Poret (1991) employed a similar methodology but
expanded their study to include longer data over longer time periods and for several
additional OECD countries, and they end up rejecting the public capital hypothesis.
Other authors have attacked Aschauer on methodological grounds. Aschauer’s focus on
total capital stock, i.e. an exclusive focus on quantitative infrastructure measures, versus