Was the allocation of public investment ideologically motivated? Evidence from the Francoist dictatorship in Spain (1939-1975)

Abstract

While much attention has been put on the criteria underlying the allocation of public investment before and after the Francoist dictatorship in Spain, no research has been conducted for this specific period. We study whether the allocation of public investment was driven by economic or non-economic incentives during the Francoist dictatorship in Spain. Our analysis consists of a two-step methodology that combines theory with an empirical model. Using a sample of 50 Spanish provinces for the period 1940-1975, we find that economic incentives coexist with non-economic incentives, which are mainly intended to avoid social conflict. These results are consistent with the theoretical model and hold when assuming spatial patterns derived from the influence of neighboring regions.