EIB Papers Volume 13. n°1/2008 - European Investment Bank

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Transport and other infrastructure investment did not grow much faster or more slowly than other types of government investment. 5. Conclusions 50 Volume13 N°1 2008 EIB PAPERS To clarify misconceptions about what government investment is and what it is not, this paper has sought to decompose it by economic function; specifically, it has sought to depict the share of infrastructure in general and transport infrastructure in particular in overall government investment and to describe changes over time in those shares. The key findings of our forensic investigation are as follows. In rough terms infrastructure accounts for one-third of government investment in the EU; in the cohesion countries that share is higher at 40 percent. Add to that government investment in hospitals and schools and half of overall government investment is accounted for. The other half comprises investment in public goods (such as military installations) and redistribution (social housing, municipal swimming pools and the like). Within government infrastructure investment, as much as 80 percent represents transport, chiefly road. In other words, the share of transport in overall government investment is on average and roughly speaking about one-quarter in the old member states of the EU; one-third in the cohesion countries; and between one-quarter and one-third in the new member states. Based on these results, we can reproduce the Venn diagram in Figure 1 with additional detail and more precision. The relative sizes of the subsets of government investment in Figure 15 are indicative of EU average. Figure 15. Composition of government and infrastructure investment in a Venn diagram Public goods Public investment Governement investment Redistribution Hospitals Schools Transport Infrastructure investment Considering government transport investment in a longer time perspective, there have not been any major trends or structural breaks, at least at the aggregate level. Both infrastructure in general and transport in particular retained their shares throughout the 1980s, moving alongside overall government investment without any clear time trends or structural breaks. To put it differently, transport and infrastructure investment did not grow much faster or more slowly than other types of government investment taken together. In a broader fiscal perspective, government transport investment has not consistently followed the ups and downs of fiscal balances, nor has it consistently carried a disproportionate burden at times of generally improving fiscal balances. Whether especially discretionary fiscal tightening has affected government transport investment differently from other government investment remains to be examined in future research.
In conclusion, government transport investment has not, over the past decades, suffered from excessive swings, slides or sudden stops – at least relative to other types of government investment. Whether that has been economically optimal or not is an altogether different issue, to be addressed elsewhere. Government transport investment has remained stable – which may or may not have been optimal. EIB PAPERS Volume13 N°1 2008 51
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Recent cost-of-funds estimates acco
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While charging for the use of publi
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High GDP growth in the new member s
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Further productivity gains, includi
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Table 2. Business constraints perce
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Where fiscal positions were sound,
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Despite progress, infrastructure de
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Table 7. Infrastructure indicators
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EU funds provide additional resourc
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Various empirical studies confirm t
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In some new member states there is
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PPPs offer new opportunities to fin
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Strong legal and institutional fram
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Additional fiscal reporting - even
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Fiscal adjustment and reforms need
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EIB Papers • Volume 13 • No1
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EIB Papers Volume 13. n°1/2008 - European Investment Bank

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