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On the Capacity to Absorb Public Investment: How Much is Too Much?
Daniel Gurara
Mr.Kangni R Kpodar
Mr.Andrea F Presbitero
Dawit Tessema
出版
International Monetary Fund
, 2020-02-28
主題
Business & Economics / Public Finance
Business & Economics / Exports & Imports
Business & Economics / Production & Operations Management
ISBN
1513529986
9781513529981
URL
http://books.google.com.hk/books?id=Y64aEAAAQBAJ&hl=&source=gbs_api
EBook
SAMPLE
註釋
While expanding public investment can help filling infrastructure bottlenecks, scaling up too much and too fast often leads to inefficient outcomes. This paper rationalizes this outcome looking at the association between cost inflation and public investment in a large sample of road construction projects in developing countries. Consistent with the presence of absorptive capacity constraints, our results show a non-linear U-shaped relationship between public investment and project costs. Unit costs increase once public investment is close to 10% of GDP. This threshold is lower (about 7% of GDP) in countries with low investment efficiency and, in general, the effect of investment scaling up on costs is especially strong during investment booms.