Highway Conditions and Insufficient Maintenance in Germany: A Threat for Economic Growth?

Abstract

We analyse the impact of transportation infrastructure capital and its maintenance status on regionaleconomic production, exploiting panel data on the German county level (N = 401) between 2007 and2016 in a spatial translog production function. Various SLX and SDEM models are estimated usingFGLS and GMM estimators accounting for endogeneity. We find a positive impact of the transportinfrastructure capital locally and supra-regionally, and provide evidence that insufficient maintenanceand low infrastructure conditions significantly slow economic growth. The analysis shows that thiseffect is mainly driven by the Bundesstraßen network as the backbone of the regional Germanroad system.