Public Infrastructure Investment Research Articles

El Plan Argentina Conectada: una política de Estado desde la infraestructura de comunicaciones

El Plan Nacional de Telecomunicaciones “Argentina Conectada” lanzado en 2010, tuvo como eje principal el desarrollo de una Red Federal de Fibra Óptica. Entre sus aspectos novedosos cabe mencionar la inversión pública en la infraestructura de internet, mediante la construcción de una red troncal, un cambio en relación al rol del Estado como inversor y dinamizador del sector desde la empresa estatal de telecomunicaciones (ARSAT); y la articulación con otras iniciativas de democratización del acceso a tecnologías digitales como el Programa Conectar Igualdad y el desarrollo de la Televisión Digital Abierta. Este artículo aborda entre otros aspectos las principales características del diseño e implementación de esta Red y el grado de vinculación y participación de actores sociales del sector, en particular del complejo científico tecnológico. Finalmente se analiza su estado actual en el marco de las modificaciones introducidas por el gobierno que asumió en diciembre de 2015.

Determinants of Off-farm Employment Participation of Women in Rural Uganda

Off-farm employment in rural areas can be a major contributor to rural poverty reduction and decent rural employment. While women are highly active in the agricultural sector, they are less active than men in off-farm employment. This study analyzes the determinants of participation in off-farm employment of women in rural Uganda. The study is based on a field survey conducted in nine districts with the sample size of 1200 individual females. A two-stage Hechman’s sample selection model was applied to capture women’s decision to participate and the level of participation in non-farm economic activities. Summary statistics of the survey data from rural Uganda shows that: i) poverty and non-farm employment has a strong correlation, implying the importance of non-farm employment as a means for poverty reduction; and ii) there is a large gender gap to access non-farm employment, but the gender gap has been significantly reduced from group of older age to younger generation. The econometric results finds that the following factors have a significant influence on women’s participation in off-farm employment: education level of both the individual and household head (positive in both stages); women’s age (negative in both stages); female-headed household (negative in first stage); household head of polygamous marriage (negative in both stages); distance from major town (negative in the first stage); household size (positive in the second stage); dependency ratio (negative in the second stage); access to and use of government extension services (positive in the first stage); access to and use of an agricultural loan (negative in the second stage); and various district dummies variables. The implications of these findings suggest that those policies aimed at enhancing the identified determinants of women off-farm employment can promote income-generating opportunities for women groups in comparable contexts. In order to capitalize on these positive linkages, policies should be designed to improve skills and knowledge by providing education opportunities and increasing access to employment training, assistance services and loans for non-farm activities and by targeting women in female-headed, large and distant households. The government should increase investments in public infrastructure and services, such as roads, telecommunications and emergency support.

Spatial-temporal analysis of community resilience to multi-hazards in the Anning River basin, Southwest China

Multi-hazards stress is an important factor that hinders social and economic development in disaster-prone areas. Assessing and improving community resilience has become an effective strategy for reducing the impacts of natural hazards and enhancing adaptive risk management. This study developed a novel framework for community resilience assessments based on five dimensions: original condition before hazard (OC), coping capability (CC), adaptative capability (AC), hazard loss (HL), and hazard exposure (HE). The Anning River basin in Southwest China was chosen as the study area to describe the spatial-temporal changes of community resilience to multi-hazards (including landslides, rock falls and debris flows), as well as to identify its critical influencing factors. The results showed that the model can accurately evaluate the changing trends of community resilience. Community resilience in the Anning River basin fluctuated greatly over the past 15 years, with significant increasing trends during 2000–2002, 2004–2011, and 2012–2014. Community resilience was significantly positively correlated with OC, CC, and AC, and negatively correlated with HL and HE. Comparing influencing factors in typical counties, public infrastructure investment, availability of television services, labor employment, medical condition and Engel coefficient are the most common key factors that influenced community resilience. Methods to improve community resilience in different regions were suggested based on these findings.

A general equilibrium model of bilateral trade with strategic public investment in commercial infrastructure

ABSTRACTWe explore how public investment in commercial infrastructure affects the composition of trade between countries. To this end, we develop a model of bilateral trade in which two countries produce, consume, and trade a continuum of goods. Goods are produced by a single homogeneous factor, labor, the productivity of which depends on the quality of the country’s commercial infrastructure, broadly conceived to encompass transportation, communication, and power transmission networks; regulatory and legal institutions; and basic research and educational systems. Countries may improve the quality of their commercial infrastructures through increased public investment. However, returns on these investments are constrained by fixed ‘natural’ endowments, with the better-endowed country enjoying greater labor productivity for a given level of public investment. We begin by analyzing optimal investment in public infrastructure in one country when public investment by the trading partner is fixed. We find that, ceteris paribus, greater public investment in commercial infrastructure raises general labor productivity, leading to gains in workers’ real income. We then analyze a non-cooperative game in which both countries strategically vary public investment in commercial infrastructure. We find that, in a Nash game, the better-endowed country optimally spends more on infrastructure and produces the goods requiring the greatest labor productivity. However, in a Stackelberg game, the results are ambiguous. An empirical analysis based on recent international trade data supports our theoretical finding that investment in public infrastructure is positively related to the export of ‘high-end’ goods.

Does Public Infrastructure Breed Consumption Downgrade and Overcapacity in China? A DSGE Approach on Macroeconomic Effects

As the most influential emerging and developing country in Asia, China has attached great importance to the construction of infrastructural facilities, laying stress on its pivotal role in sustainable growth. Recently, however, a pessimistic mood about the term “consumption downgrade” continues to emerge, ascribing the dip in people’s disposable income to real estate bubbles stemming from too much government infrastructure spending. This paper collects empirical evidence, develops a Dynamic Stochastic General Equilibrium (DSGE) framework, regards Productive Government Expenditure (PGE) as a critical endogenous variable, and investigates thoroughly its overall effects on key indicators concerning economic growth and sustainable development. Results show that household consumption indeed responds directly and negatively confronting a sudden increase of public infrastructure investment in China, yet aggregate output is instead boosted. On top of that, productive capacity does not present a supposed reduction, but a promotion under the PGE shock. These findings indicate that so-called “consumption downgrade” delivers the wrong message of weak productivity; capacity utilization is in essence improved by vigorous government support for infrastructure construction, which ultimately benefits continuously-stable social sustainability in the long term.

Transforming Our Cities: Best Practices Towards Clean Air and Active Transportation.

By 2050, 70% of the global population will live in urban areas, exposing a greater number of people to specific city-related health risks that will only be exacerbated by climate change. Two prominent health risks are poor air quality and physical inactivity. We aim to review the literature and state the best practices for clean air and active transportation in urban areas. Cities have been targeting reductions in air pollution and physical inactivity to improve population health. Oslo, Paris, and Madrid plan on banning cars from their city centers to mitigate climate change, reduce vehicle emissions, and increase walking and cycling. Urban streets are being redesigned to accommodate and integrate various modes of transportation to ensure individuals can become actively mobile and healthy. Investments in pedestrian, cycling, and public transport infrastructure and services can both improve air quality and support active transportation. Emerging technologies like electric and autonomous vehicles are being developed and may reduce air pollution but have limited impact on physical activity. Green spaces too can mitigate air pollution and encourage physical activity. Clean air and active transportation overlap considerably as they are both functions of mobility. The best practices of clean air and active transportation have produced impressive results, which are improved when enacted simultaneously in integrated policy packages. Further research is needed in middle- and low-income countries, using measurements from real-world interventions, tracing air pollution back to the sources responsible, and holistically addressing the entire spectrum of exposures and health outcomes related to transportation.

A new approach to test the effects of decentralization on public infrastructure investment

ABSTRACTThis paper proposes a simple theoretical framework to obtain a tractable equation that considers the traditional criteria for allocating public infrastructure investment and variables to capture decentralization. Panel data for the regions of Spain over the period 1986–2010 are used. Positive effects of fiscal and administrative decentralization on public investment in infrastructure are found. The results are strongly robust to different relative measures of public infrastructure investment, estimation methods and databases. Moreover, in line with recent theoretical literature, additional estimations suggest that such effects are bounded and there is no long-run relationship between decentralization and public infrastructure investment.

Spatial Economic Convergence and Public Expenditure in Ecuador

In Ecuador, the sectorial policies, public policies and state investment, increase the presence of polarized and polycentric territories with very heterogeneous characteristics and with asymmetric levels of economic growth and development. The explanation for the unequal growth of regions in Ecuador is determined by the existence of different types of asymmetries; that determine economic dynamics and non-convergent development processes. The aim of this research is to determine the effect of an increase in public spending on physical infrastructure and education, on the improvement of productive conditions and on the process of reducing disparities (convergence) at the regional level in Ecuador. To do this, the hypothesis of beta convergence will be tested, which is conditioned by the proxy variables of public expenditure or investment in infrastructure and education at provincial level, for the 2001–2015 period. The results show the existence of a "slight" process of convergence per capita and productivity, although with a significant level of territorial "segregation". In the same way, it is observed that public investment made in this period did not increase the productivity of small and medium-sized provinces significantly, severely conditioning the sustainability of the process of reducing disparities at regional level.

A General Equilibrium Model of Bilateral Trade with Strategic Public Investment in Commercial Infrastructure

We explore how public investment in commercial infrastructure affects the composition of trade between countries. To this end, we develop a model of bilateral trade in which two countries produce, consume, and trade a continuum of goods. Goods are produced by a single homogeneous factor, labor, the productivity of which depends on the quality of the country’s commercial infrastructure, broadly conceived to encompass transportation, communication, and power transmission networks; regulatory and legal institutions; and basic research and educational systems. Countries may improve the quality of their commercial infrastructures through increased public investment. However, returns on these investments are constrained by fixed “natural” endowments, with the better-endowed country enjoying greater labor productivity for a given level of public investment. We begin by analyzing optimal investment in public infrastructure in one country when public investment by the trading partner is fixed. We find that, ceteris paribus, greater public investment in commercial infrastructure raises general labor productivity, leading to gains in workers’ real income. We then analyze a non-cooperative game in which both countries strategically vary public investment in commercial infrastructure. We find that, in a Nash game, the better-endowed country optimally spends more on infrastructure and produces the goods requiring the greatest labor productivity. However, in a Stackelberg game, the results are ambiguous. An empirical analysis based on recent international trade data supports our theoretical finding that investment in public infrastructure is positively related to the export of “high-end” goods.

Macroeconomic Outcomes in Disaster-Prone Countries

Using a dynamic stochastic general equilibrium model, we study the channels through which natural disaster shocks affect macroeconomic outcomes and welfare in disaster-prone countries. We solve the model using Taylor projection, a solution method that is shown to deal effectively with high-impact weather shocks calibrated in accordance to empirical evidence. We find large and persistent effects of weather shocks that significantly impact the income convergence path of disaster-prone countries. Relative to non-disaster-prone countries, on average, these shocks cause a welfare loss equivalent to a permanent fall in consumption of 1.6 percent. Welfare gains to countries that self-finance investments in resilient public infrastructure are found to be negligible, and international aid has to be sizable to achieve significant welfare gains. In addition, it is more cost-effective for donors to contribute to the financing of resilience before the realization of disasters, rather than disbursing aid after their realization.

Explaining Thailand’s Automotive Manufacturing Success

We argue that the success of Thailand’s export-oriented automotive industry was based on three factors. First was the substantial public investment in productivity-raising port facilities and related infrastructure, beginning in the 1990s, that constituted the Eastern Seaboard economic corridor. The second was the exchange rate depreciation that accompanied the 1997-99 Asian Financial Crisis. Jointly, these two factors made manufacturing production for export more profitable. The third was two key policy changes adopted by the Thai government shortly after the crisis, and partly in response to it: (a) abolition of restrictions on foreign ownership, and (b) abolition of local content requirements.

Threats and root causes of using publicly-owned lands as assets for urban infrastructure financing

Using publicly-owned lands as assets for urban infrastructure financing considers one of the most ambitious and encouraged approaches to finance urban infrastructure since this approach would provide the needed financing to different types of infrastructure without depending on the government or on the low-income groups. This financing approach is based on obtaining revenues from private developer’s and high-end land owners through publicly-owned land selling or leasing to capture the increment in land value as a result of public investment in infrastructure. However, the usage of this financing approach in the Egyptian new cities had and will expose the government to many negative financial instability risks due to the current used policies. The main objective on this research is to explore, describe, and identify all the threats of using publicly-owned lands as an asset for urban infrastructure financing and to deduce and conclude their root causes. Accordingly, the research methodology includes literature review and qualitative analyses of some local and international failure cases in an attempt to deduce these threats and their root causes. On conclusion, using publicly-owned lands as assets for infrastructure financing ineffectively carries huge socio-economic and political negative risks for government, business and the community.

On the Effects of Infrastructure Investment on Economic Performance in Ontario

Over the past decade, Ontario has seen a renewal in efforts to stimulate economic growth by investing in infrastructures. In this paper, we analyze the impact of public infrastructure investment on economic performance in this province. We use a multivariate dynamic time series methodological approach, based on the use of vector autoregressive models to estimate the elasticities and marginal products of six different types of public infrastructure assets on private investment, employment and output. We find that all types of public investment crowd in private investment while investment in highways, roads, and bridges crowds out employment. We also find that all types of public investment, with the exception of highways, roads and bridges, have a positive effect on output. The relatively large range of results estimated for the impact of each of the different public infrastructure types suggests that a targeted approach to the design of infrastructure investment policy is required. Infrastructure investment in transit systems and health facilities display the highest returns for output and the largest effects on employment and labor productivity. In terms of the nature of the empirical results presented here it would be important to highlight the fact that investments in health infrastructures as well as investments in education infrastructures are of great relevance. This is a pattern consistent with the mounting international evidence on the importance of human capital for long term economic performance.

An Analysis of Value Capture Instruments

Value capture means capturing in some way the value of an investment in public infrastructure. Value capture methods include five forms of property-related taxes: a tax on land value uplift, a broad-based land tax, selective land tax, property taxes and transaction taxes. They may also include three forms of user charges: developer charges, consumer charges and sale of development rights. The paper assesses these options against three standard policy objectives of efficiency, equity and practicality. The paper finds that all three main forms of user charges meet these criteria. Special area land and property taxes may be appropriate in limited cases. Pure betterment taxes on land value uplift are rarely practical.

A Negative Effect of Cost‐Reducing Public Investment: The Role of Firms’ Entry

We investigate public infrastructure investment that reduces production costs in oligopoly markets. The government decides on its public investment based on conventional cost–benefit analysis that considers the direct effect (the benefit estimated as a reduction in production costs). If the entry barriers are significant, this estimation is conservative because the positive indirect effect of the subsequent production expansion is ignored. In free‐entry markets, by contrast, the indirect effect can be negative depending on the demand and cost functions. Thus, conventional cost–benefit analysis is conservative in the presence of entry barriers, buy may be too optimistic without entry barriers.

Infrastructure investments and entrepreneurial dynamism in the U.S.

Investments in physical infrastructure induce environmental changes that serve both an enabling and disabling function, potentially acting to simultaneously stimulate new business establishment and provoke exit by some incumbent establishments. The opening of a new establishment results in the creation of jobs that did not previously exist. Similarly, the closing of an establishment results in the permanent loss of jobs. I develop a theoretical model that depicts this external enabler/disabler process and test the model's predictions empirically tested using annual state-level data spanning the period 1993–2015. The results from dynamic panel system GMM estimation suggest that public and private infrastructure investments exert opposite effects on dynamism. Whereas private infrastructure investment is positively and significantly associated with the creation of businesses and jobs, public infrastructure investments are associated with the destruction of businesses and jobs. These results point to private infrastructure investment serving primarily an entrepreneurial enabler role and public infrastructure investment an entrepreneurial disabler role.

Fiscal competition and public debt

This paper explores the implications of high indebtedness for strategic tax setting when capital markets are integrated. When public borrowing is constrained due to sovereign default or by a binding fiscal rule, a rise in a country's initial debt level lowers investment in public infrastructure and makes tax setting more aggressive in that jurisdiction, while the opposite occurs elsewhere. On net a jurisdiction with higher initial debt becomes a less attractive location. Our analysis is inspired by fiscal responses in severely hit countries after the economic and financial crisis which are consistent with the theoretical predictions. We find a similar pattern on the sub-national level using administrative data from the universe of German municipalities.

State Capacity and the Economic History of Colonial India

The paper re‐examines the role of the state in economic change in colonial India (1757–1947), by paying attention to fiscal capacity. This capacity was larger than that of the precolonial states, and based on different foundations, such as centralisation of finance and securitisation of public debt. Nevertheless, the effort to raise finance hit a barrier, which had owed to the separation of debt from revenue operations. Did the barrier matter? By keeping markets open, the colonial state served private enterprise, but its failure to sustain growth in fiscal capacity compromised public investment in infrastructure and social development.

Linking resilience and robustness and uncovering their trade-offs in coupled infrastructure systems

Abstract. Robustness and resilience are concepts in systems thinking that have grown in importance and popularity. For many complex social-ecological systems, however, robustness and resilience are difficult to quantify and the connections and trade-offs between them difficult to study. Most studies have either focused on qualitative approaches to discuss their connections or considered only one of them under particular classes of disturbances. In this study, we present an analytical framework to address the linkage between robustness and resilience more systematically. Our analysis is based on a stylized dynamical model that operationalizes a widely used conceptual framework for social-ecological systems. The model enables us to rigorously delineate the boundaries of conditions under which the coupled system can be sustained in a long run, define robustness and resilience related to these boundaries, and consequently investigate their connections. The results reveal the trade-offs between robustness and resilience. They also show how the nature of such trade-offs varies with the choice of certain policies (e.g., taxation and investment in public infrastructure), internal stresses, and uncertainty in social-ecological settings.

Stabilization Policy, Infrastructure Investment, and Welfare in a Small Open Economy

This paper studies a joint monetary and fiscal policy response to an increase in public infrastructure investment in emerging market economies. I extend the neoclassical growth model to a two-sector open economy setting, and introduce heterogeneous agents to examine the distributional effects of public investment on welfare. My results show that the effects of public infrastructure investment hinge crucially on how the increases in government spending are ultimately financed. Monetary policy without fiscal adjustment for financing infrastructure expansion is inflationary, and has sizable crowding-out effects on private consumption and investment over shorter horizons. Fiscal stabilization policy is critical for the sustainability of rising government spending and price stability. With the joint effort of monetary and fiscal policy, infrastructure investment brings in significant welfare gains to the economy. Public investment has major distributional effects across agents, and the choice of fiscal instruments matters both quantitatively and qualitatively. Saving households accrue the highest welfare gains as a result of new bond issuance, while hand-to-mouth consumers are better off when non-distorting taxes are adjusted.