Essays on Public Investment and Regional Economic Performance

In the aftermath of the global financial crisis and the COVID-19 pandemic, the role of public investment has regained central importance in the European economic agenda. The renewed focus on large-scale investment programmes—such as the EU Cohesion Policy and NextGenerationEU—reflects a broader shift toward using public spending not only to stabilise economies, but also to promote structural transformation, resilience, and territorial convergence. However, the persistence of wide regional disparities across Europe calls for a deeper understanding of the mechanisms through which public investment influences productivity and development outcomes. This thesis investigates the relationship between public investment and regional economic performance, emphasising the role of institutional quality, spatial heterogeneity, and macroeconomic conditions in shaping its effectiveness. Using different econometric approaches, it analyses both national and EU-wide experiences to assess how the impact of public expenditure varies across territories and over time. The findings reveal that public investment exerts a significant positive effect on regional economic performance, but its effectiveness crucially depends on the institutional and governance context. Strong institutions and capable administrations enhance the capacity to transform public resources into productive assets, while weaker environments tend to dissipate policy returns. The analysis also uncovers substantial spatial and temporal heterogeneity: investment policies tend to be more effective in regions characterised by strong structural conditions, typically in Central and Northern Europe, and during expansionary phases when priorities are strategically aligned with growth-enhancing objectives. Conversely, in periods of crisis or in structurally weaker territories, the same resources often yield limited or even negative returns. Overall, the results suggest that what matters most is not the volume of resources mobilised but the quality of their governance and their consistency with long-term development priorities such as innovation and human capital. Strengthening administrative capacity and tailoring interventions to diverse regional and macroeconomic contexts are essential to ensure that public investment supports sustainable and inclusive convergence across Europe.