Spillover effects of public capital stock: A case study for Ecuador

Abstract

This research examines the spatial spillovers of public capital on gross value added across 216 cantons in continental Ecuador. The investigation is conducted within the framework of Spatial Econometrics, utilizing various model specifications and spatial weight matrices, complemented by a Cobb Douglas-type model that incorporates spatial dependence. The findings highlight a positive spatial impact of the public capital stock, with approximately 30% of the overall effect attributed to the indirect component. This underscores the importance of considering spatial structure when assessing the effects of capital on gross value added. Consequently, the study extends its exploration to derive column and row effects, aimed at identifying the most influential cantons within the neighborhoods established by the spatial structure.