"Driving"Policy Impact: The Multiplier Effect of Proximity to Transport Infrastructure

Abstract

The paper addresses a topical policy question, if we should invest directly in the competitiveness of firms, or in developing territorial assets, focusing on transport infrastructure. To reply to the question, the mediating effects of transport infrastructure endowment on the impacts of policy support to firms are investigated with a novel methodology in which both firm location and infrastructure are geo-coded. In this way, the paper’s methodology integrates hints from three strands of literature which were hitherto separate, those on the conditioning factors of regional policy, on the firm-level impact of policies and on the localization and micro-based measures of localization. The results, coming from estimations on an original Italian database, support that, in general, both policy interventions are helpful, with different strength depending on the territory. The analysis shows in fact that the presence of transport infrastructure positively affects the impact of policies of assistance to firms. These results, however, are territory-specific, being the presence of additional transport infrastructure more relevant in the less developed and less endowed territories, due to decreasing returns.