Philippine Infrastructure and Connectivity: Challenges and Reforms

The Philippines has performed creditably well in the past few years. Ensuring better infrastructure and connectivity is crucial in attaining inclusive growth. This will require substantial investments in infrastructure. Various reforms to address the infrastructure lack were implemented but there is scope for more reforms: improving fiscal space, reforming budgetary processes, improving public‐private partnerships (PPPs) and the regulatory environment, and better policy coordination to address problems of connectivity and infrastructure. The Philippines has to continuously improve the governance framework, ensure stability and predictability of policies and regulations. Better coordination among a diverse set of governmental infrastructure bodies, and also between government and the private sector is needed to address infrastructure bottlenecks.     

The political economics of investment Utopia: public–private partnerships for urban infrastructure finance

This article explores the policy disconnect between the pursuit of private investment return and the public desire for enhanced social value from public–private partnership (P3) investments in urban infrastructure. Investors view infrastructure finance as an opportunity for relatively safe, high-return investing. But infrastructure-financing architecture to achieve high private returns frequently clashes with financing models that sustain long-term social benefits. The full implications of relational tensions in the structuring of P3s are analyzed. The principal policy conclusion is that, because of these tensions, the use of P3s for this purpose should be restricted.     

PUBLIC–PRIVATE PARTNERSHIP TO DEVELOP TECHNOLOGY INFRASTRUCTURE: A CASE STUDY OF THE ECONOMIC RETURNS OF DNA DIAGNOSTICS

This paper presents a quantitative case analysis of one US Advanced Technology Program (ATP) public–private partnership that advanced the technology infrastructure of molecular diagnostics, resulting in substantial downstream economic and public health benefits. Biotechnology R&D is generally characterized by technologies requiring substantial investments in time, money, and effort to develop and sustain concepts through long incubation times. Public sponsorship of a partnership between two companies who would have not otherwise collaborated, Affymetrix and Molecular Dynamics, accelerated the development of DNA microarrays and DNA sequencing technologies and induced innovation at competitor firms. Public sponsorship of private-company research accelerated the completion of the Human Genome Project and improved both the quality and rapidity with which the biotechnology industry and medical science acquire genetic information. Counterfactual scenarios were used to quantify net public benefits by estimating the hypothetical costs of achieving the same outcomes as using the processes and technologies the ATP-cofunded innovations superseded.     

Public and Private Investments in Greece: Complementary or Substitute ‘Goods’?

This paper investigates whether government investment spending exerts a positive or a negative effect on private investments. Time-series data for Greece as well as the methodology of cointegration suggest that, over the period 1948-80, public investment spending exerted a positive effect on private investments, while over the period 1981-96, the relationship turned out to be negative. Empirical results indicate that the large increase of the public share in the total investment process tended to crowd out private investments and to jeopardize the growth process of the economy.     

Causal relationship between construction investment policy and economic growth in Turkey

The construction industry in countries experiencing severe economic crisis has vital importance to get out of stagnation because of its direct relations with 200 different sectors. In this study, the relationship between the construction growth data (infrastructure, building and residential (public), building and residential (private) investment) and gross domestic product (GDP) is examined for Turkey. To this end, Engle–Granger cointegration, error correction model (ECM) and Granger causality tests were applied in order to determine the aforementioned relation. It has been found that the infrastructure and building–residential investments have direct relations with the GDP and have causality effects.     

Productive efficiency and growth policies for the Caribbean

Productive (economic) efficiency and factors affecting it was evaluated in the Caribbean between 1983 to 1992. Results from non-parametric programming indicated that efficiency (i.e. pure technical, allocative and economic) measures were lower and more variable in Caribbean than in other Western Hemisphere countries (i.e. North America and Latin America). Tobit regression analysis indicated higher levels of private and foreign investments, productive infrastructure, credit availability, education level, and consumption of domestically produced goods had positive impacts on the efficiency measures. On the other hand, higher levels of public expenditure, income tax, and export taxes, and higher inflation rates had negative effects. These results support the current trend towards advocating more open economies (i.e. letting the free market work) and encouraging governments to confine their functions to facilitative/regulatory type roles and to undertaking tasks that are not generally undertaken by the private sector (e.g. developing infrastructure, providing education). Although, generally, the same factors were associated with efficiency in the Caribbean and Latin America, their relative impacts differed. Consequently, in order to improve efficiency in the Caribbean countries, relatively greater emphasis should be placed on encouraging foreign and private investment and developing infrastructure than would be the case in Latin American countries.     

China's Transport Infrastructure Investment: Past,Present, and Future

China has been heavily investing in transportation infrastructure since the 1990s. Consequently, connectivity has been significantly improved, both within China and between China and other countries. Such large‐scale investments have been made possible by various financing mechanisms from the central government, local governments, and the private sector. Research findings generally indicate that these infrastructure investments bring economic prosperity to the country, affect the distribution of economic activities, reduce poverty to a certain extent, and promote economic integration. The future trends of connectivity changes in China and relevant policy recommendations are also discussed in this paper.     

UNPACKING THE INFLUENCE OF PUBLIC–PRIVATE PARTNERSHIPS ON DISASTER RESILIENCE: A COMPARISON OF EXPERT PERSPECTIVES

Public managers are under increasing pressure to develop and operate physical infrastructure systems that prove resilient in the face of natural disasters. At the same time, fiscal pressures and mounting infrastructure needs are drawing more and more attention to public–private partnerships (PPP) as a mechanism for delivering infrastructure. The research question guiding this study is how can the institutional designs of PPPs influence the potential for improving infrastructure resilience? We examined the perceived relationship between infrastructure resilience and PPPs by conducting and analyzing research interviews with twenty‐four senior infrastructure experts in Washington, DC. The results reflect findings of related privatization research, indicating that market‐based incentives can advance public values such as resilience, but the responsibility for ensuring they do so rests primarily with government. We note key differences in how the infrastructure investment experts and disaster resilience experts view issues in infrastructure management, and provide suggestions for improving public‐private collaboration to improve resilience.     

Public investment,the rate of return,and optimal fiscal policy in a stochastically growing economy

This study examines the optimal fiscal policy in a stochastic endogenous growth model with private and public capital. The government is willing to actualize a socially optimal equilibrium using a lump-sum tax and government debt linked to public investments, subject to the budget constraint under the golden rule of public finance. A socially optimal fiscal policy states that a deterministic rate of return on government bonds sets the marginal product of public capital. Moreover, public investments optimally adjust the ratio of private capital to public capital to equate the rates of return on such capital. The presence of stochastic disturbances results in a disparity between the optimal marginal products of the two types of capital, as reported in previous empirical studies. This disparity significantly affects the socially optimal growth rate in response to investment risk.     

Optimal mixed ownership: A contract view

This paper reconsiders the classic issue of whether provision of a public good should be undertaken directly by the government or through private contracting (Hart, Andrei, & Robert, 1997). We consider a third alternative of provision by a mixed ownership firm. We assume that this mixed ownership firm provides the government principal with a combination of the contracting problems it faces in the two more extreme alternatives. We show that full government ownership and provision is never optimal and that frequently the mixed firm undertakes intermediate investments that also prove welfare superior to fully private contracting. These results carry over to an extension in which the agent is presumed to be a foreigner.     

Market Reform and Infrastructure Development in Transition Economies

This paper analyzes the determinants of investments in physical infrastructure over the first decade of market reform in Central and Eastern Europe and other former Soviet economies. Both market and political reform would be expected to have an impact on the level of infrastructure, but the relationship will likely differ for infrastructure which remains dependent on the public sector and that which becomes more dependent on private investment after such reforms. Results for a large cross section of transition economies show that market reform has had a positive impact on both traditional and newer types of infrastructure, with a stronger impact on the newer types which are more likely to be market‐derived. The findings also suggest that market reform is more likely to push investors to develop infrastructure when political and market reforms are accomplished in tandem.     

公共产品供给的"第四条道路"--PPP模式研究

PPP 是基础设施等准公共产品供给新模式。该模式依据公共产品理论和代理理论,依托私人部门的资金、技术和管理等优势,缓解了公共部门支出不足,提高了公共支出效率的新公共管理模式。PPP 的突出特点是公共部门向私人部门转移风险和私人部门向公共部门传递现金价格。我国已具备实行 PPP 模式的现实环境和管理意识。应重新界定公共部门,加强政府服务意识,加快公共管理改革步伐,通过 PPP 模式,减轻政府财政压力,提升我国公共服务的供给水平。     

Public–private partnerships for the provision of public goods: Theory and an application to NGOs

When will a public good or service be provided by the government, when will it be provided by a NGO, and when will we see a private–public partnership? This paper provides a model where a typical public good requires different inputs which raises the possibility of partnerships to exploit comparative advantages of different parties. But hold-up problems due to contractual incompleteness in specifying tasks discourage separation of ownership and management. The fact that public goods have the property of non-rivalry and non-excludability and that NGOs tend to be non-profits drives our key results. We apply the framework to NGOs in developing countries which, in the last few decades, have been increasingly involved in various capacities in the provision of a wide range of public goods and services.     

Debt financing of public investment: On a popular misinterpretation of “the golden rule of public sector borrowing”

In this paper I challenge the proposition that the golden rule of public sector borrowing is consistent with the principle of intertemporal allocative efficiency, in the sense that growth-enhancing public investment justifies a structural public deficit. I demonstrate that in the long run the social opportunity cost of debt-financed public investment exceeds the social opportunity cost of tax financed public investments. This result holds if the social rate of time preference is lower than the interest rate on government borrowing. Thus a benevolent government would use taxes to finance public investment. In the short run, debt financing is justified if public investment has a considerable growth effect on private consumption. This requires a corresponding initial undersupply of public capital.     

Effects of government spending on private investment

This paper investigates the effects of military and non-military public expenditures on gross private investment using cointegration and error-correction analysis. The latter type of public spending is disagreggated into expenditures of infrastructure, consumption and other general government expenditures. The empirical evidence from four emerging European countries namely, Greece, Ireland, Portugal and Spain suggests that in some cases public capital spending stimulates investment, while in others it depresses it. Also, the results tentatively indicate that defence spending exerts no influence on private investment, thus adding to the ongoing controversy of the economic effects of military spending.     

基于多视角的PFI项目风险评估研究

PFI（Private Finance Initiative）是目前发达国家广泛推行的一种新的民营资本参与公共投资的项目建设管理模式。政府在确定PFI项目的时候,需要考虑众多因素,从不同角度客观论证项目的可行性。这其中,项目的风险是PFI项目决策时必须考虑的问题。PFI项目相对于传统公共项目而言,风险体系的建立、风险评估的方法都会有其特殊性。同样的风险对于不同的主体会产生不同的影响。本文建立了PFI项目的风险评估指标体系,并且在利益相关者分析的基础上,综合三大主要利益相关者——政府公共部门、SPC、使用者（公众）的群体意见,运用基于格栅获取的模糊Borda数方法实现了PFI项目风险的多视角评估。对多个备选PFI项目中进行多视角评估,可实现项目决策的优先排序;对单一项目进行多视角评估,可反映项目的风险水平;最后通过算例验证该方法的可行性、有效性和实用性。PFI模式在我国适逢良好的发展机遇,相关的理论研究正成为热点,风险管理就是其中的一大方面,对此所作的探讨是必须且有意义的。     

Private investment with social benefits under uncertainty: The dark side of public financing

We develop a game‐theoretic model of private–public contribution to a long‐term project with sequential actions and moral hazard. A private agent is one who is in charge of both the financial contribution and the management effort, these two actions entailing private costs and uncertain ex‐post private and social benefits. A public agent is one who decides the amount of public funding to this quasi‐public good, knowing that the size and the probability of attaining a surplus ex post depend on the private agent's effort. We consider four public‐funding scenarios: benefit‐sharing versus cost‐sharing crossed with ex‐ante versus ex‐interim government intervention. We test our theoretical predictions by means of an experiment that confirms the main result of the model: Cost‐sharing public intervention is more effective than benefit‐sharing in boosting private financial contribution to the project. Furthermore, when public intervention comes after private contribution ( ex‐interim government intervention), both public‐funding scenarios have a negative impact on the private management effort. In our model, the latter result is explained by the private agent's high degree of risk aversion. These results have policy implications for strategic investments with long‐term social consequences. In deciding the optimal timing and method of the contribution, governments should also consider the indirect effects on agents’ long‐term management efforts.     

农村基础设施公共投资的区域差距测度——基于回归的分解方法

农村基础设施公共投资对农业增长有重要作用,但也在一定程度上影响了区域差距的形成。我国的东部、中部和西部地区在农村基础设施公共投资方面的差距较大。通过基于回归的方差分解,运用1994～2009年的我国省级面板数据,研究发现我国农村间的区域差距,能够被农村基础设施公共投资上的差异所部分解释。要加大对西部地区的农村基础设施公共投资以改善当前我国农村区域差异过大的现状,倘若政府持续执行沿海侧重型的投资发展策略,则区域差异将有进一步恶化的趋势。为此,必须提高财政对农村基础设施的投资水平,尤其加大对中西部农村的投资,并改革农村基础设施的投资制度,促进投资主体的多元化。     

Crowding-in and crowding-out effects of public investments in the Portuguese economy

This study analyses the effects of public and private investment on Portuguese GDP in the period 1960–2013. After a review of the literature based on works developed in the context of VAR analyses, an alternative econometric strategy is proposed. We opt for ADL models using the methodology of Krolzig-Hendry-Doornik. We estimate direct effects of public and private investments on themselves and also a system of simultaneous equations and calculate the multipliers of the exogenous variables, represented by the current external transfers, the short-run nominal interest rate and public debt ratio. Additionally, we tested a model with the first three equations of the system, using beyond those variables the real exchange rate as an exogenous variable. The results point to the existence of a complementarity between private investment and public investment rather than any idea of substitutability. We find that public debt has important negative effects on public and private investments and consequently on output. Public investment has positive effects on output and on private investment. The appreciation of the real exchange rate has an important and long-lasting negative effect upon output, confirming the presence of a mechanism associated with a Dutch-disease phenomenon in the Portuguese economy.     

Forms of Explanation; Rethinking the Questions in Social Theory

The aim of this study is to investigate whether the so-called crowding in effects of complementarity or the crowding out effects of substitution occurred between public investment and private investment in Brazil from 1982 to 2013. This will be carried out through a theoretical debate on the investment general dynamics and an econometric analysis of vector error correction (VEC) model for the Brazilian case. The trajectory of the Brazilian economy and the empirical results show the presence of crowding in between public and private investments in the period, in accordance with the Post-Keynesian approaches. The crowding in is justified by the effects on demand via the Keynesian multiplier and via the expansion of the domestic market (particularly provided by infrastructure) and by the effects on the supply of private capital through the reduction of production costs, the increase in productivity, and through structural changes facilitated by public policy. Complementarity with regard to both the investments of the public administration and of federal government-owned/controlled enterprises is confirmed. Furthermore, a significant causal relationship is observed between public investment and the output of industrial manufacturing, which, from the structuralist perspective, is a sector that is considered a driving force of the economy. The special contributions of this paper are its time series for public investment and the variety of models that show crowding in between public and private investment.