Public infrastructure capital, scale economies and returns to variety

Services of regional GDP were used as regressands do the coefficients of social public capital reach
high and significant levels. Nevertheless, as in the two previous tables, the Hausman specification test
suggests that there is a concern for the problem of public capital endogeneity.

Table 3 The effect of social public capital (G social) on the GDP of the non-manufacturing sectors of

Greece, 1982-1991

Equation for per capital regional income (ln)

***Statistically significant at 1% level **Statistically significant at 5% level *Statistically significant at 10% level

The overall conclusion from the analysis of the relationship of the total regional GDP and the
total infrastructure is that the latter appears to have no significant impact on the former. This is also
true for the productive and social categories of public capital. The breakdown of the regional GDP
has not given any indication that infrastructure, in its total, productive, or social form, has a direct
productive effect on the private economy whatever the GDP category, if the Hausman specification
test results are taken into consideration.

However, it has to be emphasised again that the quasi-production functions utilised here are
severely constrained by the data limitations. It is probably the case that the labour input proxy of
employment in the manufacturing sector is a poor measure of the employment activity in the specific
regional unit in the Greek case. In some Greek prefectures the employment in the primary and tertiary

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