Estimating the Efficiency of Public Infrastructure Investment: A State-wise Analysis

2018 ◽  
Vol 19 (4) ◽  
pp. 1037-1049 ◽  
Author(s):  
Manvi Saxena ◽  
Varun Chotia ◽  
N.V. Muralidhar Rao

The objective of this study is to empirically analyse the relationship between public infrastructure investment and economic growth for India using yearly data for its 28 states (excluding Telangana). We have taken six major sub-sectors falling under infrastructure sector: transport; education, sports, arts and culture; energy; medical and public health; telecommunication; and water supply and sanitation. We have aimed to analyse the efficiency of each of these sub-sectors using data envelopment analysis (DEA). For every state, we have used the public investment data from the state budget files as input while sector-specific infrastructural criterions and sector-wise revenue are taken as outputs. We have gone by the logic that a state’s particular sub-sector of infrastructure will be highly efficient if it is able to use up the investment allotted to it and create a stronger infrastructure as compared to other states, subsequently generating higher amount of revenues. For each sector, various infrastructural criteria were clubbed together using principal component analysis technique to construct a single infrastructure index (representing the sector-wise output). Further, DEA was applied to calculate efficiency for each Indian state and they were ranked based on their efficiency scores. The analysis tells us that policy-making and budget allocation may be done in accordance with standing performances of different states in various sectors and the goals of the respective state governments.

Author(s):  
Arwiphawee Srithongrung ◽  
Kenneth A. Kriz

This chapter describes the public capital budgeting process in Thailand. Public infrastructure is very centralized; local governments do not play a large role in public infrastructure investment. The country's long-term physical planning is fragmented and lacks an effective long-term fiscal planning. The budget process is dominated by senior civil servants in the Bureau of the Budget, the Ministry of Finance, Bank of Thailand, and the National Economic and Social Development Board. Expensive projects financed by long-term debt bypass the budget process, and as a result, a comprehensive list of annually approved projects is unavailable to the public. This leads to public investment being driven almost entirely by debt capacity. Because of these factors, Thai governments have invested too little in public infrastructure, and the infrastructure investment is uneven across sectors.


2021 ◽  
Vol 12 (3) ◽  
pp. s085-s107
Author(s):  
Iryna Drozd ◽  
Mariia Pysmenna ◽  
Nataliia Pohribna ◽  
Nataliya Zdyrko ◽  
Anna Kulish

The article seeks describing the benefits and challenges faced by auditors in assessing the effectiveness of public procurement procedures in terms of applying the methodology for calculating efficiency, economy and effectiveness, taking into account the risks of procurement in e-auctions. Quantitative risk parameters are calculated using data of probabilistic indicators of procurement risk assessment according to the ratio of the number of relevant procedures (sub-threshold and above-threshold) to the total number of procurement procedures. Statistical valuation methods are used for the cost risk assessments and calculation of the aggregate risk indicator of public procurement. The calculations are performed using the data of the open e-procurement system ProZorro for all announced procurements in 2018-2019. We analyzed the methods, indicators and the extent to which the study of the public procurement effectiveness via bibliographic and case studies is performed. As a result, the majority of methods cover four components of assessing the public procurement efficiency - targeted efficiency, cost-effectiveness, organizational efficiency, efficiency of budget expenditures for public procurement. This does not provide an assessment of the automated systems’ impact on the procurement procedures results and on possible savings due to the use of certain procurement procedures. To comprehensively assess the procurement efficiency in e-bidding, the authors propose considering four key risks: the risk of cancellation of the procurement procedure, the risk that the procurement procedure will not take place, the risk of appealing the procurement, the risk of disqualification. As a result of risks calculations under the sub-threshold and above-threshold procurement, individual values of risks and their aggregate indicator are determined. This will adjust the scope of audit procedures to verify individual procurements and identify weaknesses in the procurement management system. We believe that the methodology of auditing the procurement effectiveness, taking into account the quantitative and qualitative parameters of procurement risks, will be a useful audit tool to determine the effectiveness of the use of public funds under individual procurements and identify areas of cost-effectiveness for the state budget funds.


2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Jose Perez-Montiel ◽  
Carles Manera

Purpose The authors estimate the multiplier effect of government public infrastructure investment in Spain. This paper aims to use annual data of the 17 Spanish autonomous communities for the 1980–2016 period. Design/methodology/approach The authors use dynamic acyclic graphs and the heterogeneous panel structural vector autoregressive (P-SVAR) method of Pedroni (2013). This method is robust to cross-sectional heterogeneity and dependence, which are present in the data. Findings The findings suggest that an increase in the level of government public infrastructure investment generates a positive and persistent effect on the level of output. Five years after the fiscal expansion, the multiplier effects of government public infrastructure investment reach values above one. This confirms that government public infrastructure investment expansions have Keynesian effects. The authors also find that the multiplier effects differ between autonomous communities with above-average and below-average GDP per capita. Originality/value To the best of the authors’ knowledge, no research uses dynamic acyclic graphs and heterogeneous P-SVAR techniques to estimate fiscal multipliers of government public investment in Spain by using subnational data.


2017 ◽  
Vol 9 (1) ◽  
pp. 50-69 ◽  
Author(s):  
Shanmugam Muthu

Purpose The purpose of this paper is to examine the crowding-in or crowding-out relationship between public and private investment in India. Design/methodology/approach The autoregressive distributed lag (ARDL) bounds testing approach is used to estimate the long run relationship between public and private investment using annual data from 1971-1972 to 2009-2010. Findings Based on the empirical findings, it is observed that aggregate public investment has a positive effect on private investment both in the long run and the short run. In contrast to the findings of previous studies, no significant impact of public infrastructure investment on private investments is found in the long run, while non-infrastructure investment has a positive impact on private investment in the short run. Among the various categories of infrastructure sector, a positive and significant impact in the case of electricity, gas and water supply is observed. Similarly, the result indicates that public investment in machinery and equipment and construction have substantially influenced the private sector machinery and equipment in the long run and the short run. In the case of the role of macroeconomic uncertainty, the results find a negative and significant impact on private investment and the impact is higher in the short run than in the long run. Originality/value The present study extends the literature in three important ways: First, the study attempts to capture heterogeneity of public investment as well as disaggregate effects of two different categories of public infrastructure on private investment. The extent to which two different types of public assets impact the private investment in machinery and equipment investment is also examined. Second, ARDL model is used to examine the long-run relationship between public and private investment. Third, the study incorporates macroeconomic uncertainty into the empirical analysis to examine the role of macroeconomic volatility in determining private investment decision.


2014 ◽  
Vol 41 (1) ◽  
pp. 29-50 ◽  
Author(s):  
Luis Carranza ◽  
Christian Daude ◽  
Angel Melguizo

Purpose – This paper aims to understand the relationship in developing countries between fiscal consolidation and public investment – a flexible part of the budget that is easier to cut during consolidation effort, but with potentially negative growth effects. Analyzing in detail the case of Peru, the paper explores alternative fiscal rules and frameworks that might help create fiscal space for infrastructure investment. Design/methodology/approach – The paper analyses trends in public and total infrastructure investment in six large Latin American economies, in the light of fiscal developments since the early 1980s. In particular, the paper explores the association between fiscal consolidations (improvements in the structural fiscal balance) and public infrastructure investment rates. In the second part, the paper analyzes recent changes in the fiscal framework of Peru and shows how they were conductive in creating additional fiscal space. Findings – The authors argue that post-crisis fiscal frameworks, notably fiscal rules that are increasingly popular in the region, should not only consolidate the recent progress towards debt sustainability, but also create the fiscal space to close these infrastructure gaps. These points are illustrated in a detailed account of recent developments in the fiscal framework and public investment in the Peruvian case. Originality/value – The paper contributes new evidence to the literature on fiscal consolidation and the composition of government expenditures. While the literature based on evidence from the 1990s has argued that fiscal consolidation plans in Latin America have almost always led to a significant reduction in public infrastructure investment, the paper finds less clear cut evidence when extending the analysis backwards (1980s) and forwards (2000s). The example of the case of Peru is used to explore fiscal institutions and rules that might be useful for other developing countries that face important infrastructure gaps.


2008 ◽  
Vol 12 (2) ◽  
pp. 172-194 ◽  
Author(s):  
GUSTAVO A. MARRERO

One part of the literature on endogenous growth concerns models where public infrastructure affects the private production process. An unsolved puzzle in this literature concerns observed public investment-to-output ratios for developed economies, which tend to fall short of theoretical model-based optimal ratios. We reexamine the optimal choice of public investment in a more general framework. This setting allows for long-lasting capital stocks, a lower depreciation rate for public capital than for private capital, an elasticity of intertemporal substitution that differs from unity, and the need to finance a nontrivial share of public services in output. Given other fundamentals in the economy, we show that the optimal public investment-to-output ratio is smaller for low-growth economies, for economies populated by consumers with low preferences for substituting consumption intertemporally, and when public capital is durable. For a calibrated economy, we show that a combination of these factors solves the public investment puzzle.


Author(s):  
Martin Ferko ◽  
Jan Česelský ◽  
Zbyněk Proske

Abstract The paper shortly introduces and describes a computational model that illustrates the impact of land development construction investment in the form of creating new needs for public infrastructure and community facilities in the territory. New construction investment may also initiate other construction investment, which also increases the demands on ensuring the capacity of public infrastructure. For public administration (local and regional), the created model can facilitate preparation, decision-making and management of public investment in the territory while respecting the 3E principle.


2021 ◽  
Vol 1 (2) ◽  
pp. 69-80
Author(s):  
Syam Aditya Herlangga ◽  
Bayu Arsiadhi Putra ◽  
Aris Setyoko

Abstract: Turonggo Karyo Budoyo is one of the Jaranan arts groups in the city of Samarinda. This group managed to maintain its existence amidst the reduced public interest in the performing arts of jaranan, especially the youth who should be the successors in preserving local arts. It is done through the creativity offered by the Jaranan Turonggo Karyo Budoyo Art Group, which combines pop songs with jaranan gending in their performances. This study aims to analyze the processes that occur in creativity and describe how the audience's acceptance of creativity. This study uses a qualitative research methodology and a participant approach using 3 (three) stages in the study, namely determining the research location, data collection techniques, and data analysis techniques. Determination of the location aims to focus on the object of research. Data collection techniques include literature study, observation, interviews, and documentation. As for the data analysis technique using data triangulation between researcher observations, interview data, and analyzed documentation. The results of this study can answer the formulation of the problem and research objectives that have been determined. The creative process is carried out through regular practice by paying attention to the budget, duration, and song selection. The process also involves four dimensions of creativity that influence each other: person, process, press, and product. The creativity offered is well received by the public or audience. The community considers combining pop songs with gending to be one way to introduce Javanese art to the broader community, especially young people, to be preserved.   Abstrak: Turonggo Karyo Budoyo merupakan salah satu grup kesenian jaranan yang ada di kota Samarinda. Grup ini berhasil mempertahankan eksistensinya ditengah berkurangnya minat masyarakat terhadap seni pertunjukan jaranan terutama para pemuda yang seharusnya menjadi penerus dalam melestarikan kesenian daerah. Hal ini dilakukan melalui kreativitas yang ditawarkan oleh Grup Kesenian Jaranan Turonggo Karyo Budoyo, yaitu menggabungkan lagu pop dengan gending jaranan dalam pertunjukannya. Tujuan penelitian ini adalah menganalisa proses yang terjadi di dalam kreativitas serta menjabarkan bagaimana penerimaan penonton terhadap kreativitas tersebut. Penelitian ini menggunakan metodologi penelitian kualitatif dan pendekatan partisipan dengan menggunakan 3 (tiga) tahapan dalam penelitian, yaitu menentukan lokasi penelitian, menentukan teknik pengumpulan data serta menentukan teknik analisa data. Penentuan lokasi bertujuan untuk memfokuskan objek penelitian. Teknik pengumpulan data meliputi studi kepustakaan, observasi, wawancara, dan dokumentasi. Adapun untuk teknik analisa data menggunakan tringulasi data antara observasi peneliti, data wawancara, dan dokumentasi yang dianalisis. Hasil penelitian ini mampu menjawab rumusan masalah dan tujuan penelitian yang telah ditentukan. Proses kreativitas dilakukan melalui latihan rutin dengan memperhatikan budget, durasi serta pemilihan lagu. Dalam prosesnya juga melibatkan empat dimensi kreativitas yang saling mempengaruhi, yaitu person (orang), process (proses), press (tekanan), serta product (produk). Kreativitas yang ditawarkan diterima baik oleh masyarakat (penonton). Penggabungan lagu pop dengan gending dinilai masyarakat menjadi salah satu cara memperkenalkan kesenian jawa kepada masyarakat luas terutama para pemuda agar dapat dilestarikan.


2020 ◽  
Vol 12 (2) ◽  
pp. 119-138
Author(s):  
Nishija Unnikrishnan ◽  
Thomas Paul Kattookaran

Literature presents contradictory views regarding the impact of public and private investment on the economic growth of a country. India being a developing country, where the major share of investment is by public sector, the question which props up is what among public and private investment is contributing more towards the economic growth of the country. In this framework, the gross domestic product (GDP) can be fairly explained as a function of public infrastructure investment and private infrastructure investment. Johansen’s co-integration was used to test the long-run relationship between the variables over the period from 1961–1962 to 2016–2017. A vector error correction model (VECM) along with an impulse response function and variance decomposition analysis was done to measure the impact of public infrastructure investment and private infrastructure investment on the GDP. Based on the empirical evidence discussed earlier, it was evident that both public and private infrastructure investments have a significant impact on the economic growth of the nation. Findings which came up in this study correlate to majority findings of past literature that, when compared with public investment, it is private investment which is capable of giving a better impetus to economic growth.


2020 ◽  
Vol 9 (3) ◽  
pp. 157-166
Author(s):  
Iordanis Petsas ◽  
Sofia M Vidalis

The U.S. infrastructure has been issued a grade of D+ from the American Society of Civil Engineers because of the low funding for new construction, maintenance, and repair. It is now reaching the end of its useful life and cost estimates have reached as high as $3.6-trillion. The public infrastructure investment is at 2.4% of GDP, which is half of what it was 50-years ago. The U.S. has explored new ways to finance its infrastructure because of funding uncertainty. Investments such as, pensions, foreign investments, and sovereign wealth funds, manage trillions in assets and are forecasted to grow. This paper presents an overview in infrastructure funding and identifies possible approaches in addressing long-term financial needs with foreign capital partnership.


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