Setting the scene: Infrastructure patterns in emerging markets · Predicted infrastructure patterns...
Transcript of Setting the scene: Infrastructure patterns in emerging markets · Predicted infrastructure patterns...
Domestic resource mobilization. Infrastructure
Development Finance Network (DeFiNe)
Annual Meeting
Paris, 10-12 October 2010
Setting the scene: Infrastructure patterns in emerging markets
Christian Daude and Ángel Melguizo
Americas Desk
OECD Development Centre
2
• Infrastructures are key for potential growth, development and stabilization policies (e.g. G20 agenda)
Growth and inequality gaps Asia-Latin America explained by infrastructure gaps – less spending, lower quality (Calderón and Servén, 2004b)
• Emerging economies: significant infrastructure gaps
• Latin America lags behind Asia and emerging Europe
• Significant differences across infrastructure types (basic, transport, energy and telecommunications) and countries
• Fundamentals-observed levels (Balmaseda, Daude, Melguizo and Taft, 2010)
• Policy response
• Building better institutions (quality of bureaucracy, fiscal position)
• Improving regulation (in particular around public-private financing)
Main messages
3
Developed
Eastern Europe
Asia LatAm
10
11
12
13
14
0 1 2 3 4 5
Log GDP pc
Log lin
es/p
op
Setting priorities: infrastructure levels
Per capita telephone lines and Income level, 2007
Income and population matter – but so do demographic (age profile), social (urbanization) and economic (sector mix) variables.
Source: Balmaseda et al. (2010)
LatAm
Asia
Eastern Europe
Developed
3
4
5
6
7
8
9
10
20 40 60 80 100 120
Urbanization ratioLog K
ws/p
op
Kilowatts pc and Urbanization rate, 2006
Source: Balmaseda et al. (2010)
4
Empirical model (Balmaseda et al., 2010)
Explanatory variables - Per capita income (level and squared) - Socio- demographics (urbanization, density) - Productive structure (services and industry vs. agriculture)
Predicted infrastructure patterns (Km/area, KW pc, pc lines)
Observed levels (Km/area, KW pc, pc lines)
‘Degree of achievement’ (Observed levels/ Patterns)
Predicted infrastructure patterns (for country i, in time t) can be compared to actual levels, to estimate gaps and identify priorities.
5
Results (observed vs. predicted): Priorities
Paved roads
Asian and Lat. Am. challenges concentrated in Transport and Energy infrastructure. In LAC, even the regional leader is below predicted levels.
0%
40%
80%
120%
160%
200%
240%
280%
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
LatAm MAX-min LatAm
Asia
Eastern Europe
Observed / Predicted (%)
0%
20%
40%
60%
80%
100%
120%
140%
160%
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
LatAm MAX-MIN LatAm
Asia
Eastern Europe
Electricity Capacity Generation
Source: Balmaseda et al. (2010) Source: Balmaseda et al. (2010)
6
Results (observed vs. predicted): Priorities
Telephone lines
The situation in telecommunication and basic infrastructure is more balanced. Some good practices may stem from LAC.
0%
50%
100%
150%
200%
250%
300%
350%
400%
450%
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
LatAm
Asia
Eastern Europe
LatAm MAX-min
Access to improved water
70%
90%
110%
130%
150%
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
LatAm
Asia
Eastern Europe
LatAm MAX-min
Observed / Predicted (%)
Source: Balmaseda et al. (2010) Source: Balmaseda et al. (2010)
7
Results (gaps and fiscal balances): Domestic financing
Lower public debt ratios are correlated with lower infrastructure gaps • Fiscal consolidation have been traditionally based on investment cuts (Calderón and Serven, 2004a, Martner and Tromben, 2005 for LAC) • Public borrowing costs reflect (perceptions of) debt sustainability
-20
24
6
e(
ecg
| X
)-.5 0 .5 1 1.5
e( debtgdp | X )
coef = -.70912416, (robust) se = .09684161, t = -7.32
-20
24
6
e(
rail
| X
)
-.5 0 .5 1 1.5e( debtgdp | X )
coef = -.52702326, (robust) se = .18359908, t = -2.87
Electricity Railways
Source: Balmaseda et al. (2010) Source: Balmaseda et al. (2010)
8
Results (gaps and bureaucracy): Public administration
-20
24
6
e(
ecg
| X
)-3 -2 -1 0 1
e( bqual | X )
coef = .57518505, (robust) se = .03843958, t = 14.96
-20
24
e(
paved
| X
)
-3 -2 -1 0 1e( bqual | X )
coef = .45977591, (robust) se = .03161675, t = 14.54
Electricity Paved roads
Better institutions (quality of bureaucracy) are correlated with lower infrastructure gaps
• Need to have domestic resources and management capacity • Governance, control of corruption, adequate regulation
Source: Balmaseda et al. (2010) Source: Balmaseda et al. (2010)
Domestic resource mobilization. Infrastructure
Development Finance Network (DeFiNe)
Annual Meeting
Paris, 10-12 October 2010
Setting the scene: Infrastructure patterns in emerging markets
Christian Daude and Ángel Melguizo
Americas Desk
OECD Development Centre
www.oecd.org/dev/americas
10
Annex: Database
LatAm AsiaEastern
EuropeOther Asia Europe
North
America
Arg China Bul Isr Kor Austria US
Bra India Cro Tur HK Bel Can
Chile Indo Cz Rus Sing Fra
Col Mal Hun Jor Jap Ger
Mex Phi Lit South Af. Aud Gre
Ven Tha Est Egy NZ Ire
Peru Vietnam Pol Mauritania Ita
Costa Rica Rom Mor Net
Dom. Republic Slovak Por
Slovenia Spa
Ukr OK
Lux
Swi
Den
Fin
Nor
Swe
Ice
Emerging Economies Developed
11
Annex: Database
Number of
countriesSample
Infrastructure Stocks
Telephone lines (mobile and fixed) Number of lines 61 80-07
Electricity Generating Capacity Kilowatts 60 80-06
Paved Roads Kilometers 61 80-04
Rail-lines Kilometers 60 80-06
Improved water source (% of population with access) % 51 90-06
Sanitation (% of population with access) % 46 90-06
Number of Personal Computers In million 61 93-06
Number of Internet users In million 61 93-06
Other variables
Population In million 61 80-07
Gross Domestic Product In constant 2005 PPPs 61 80-07
Land area In squared kilometers 61 80-07
Urbanization ratio% of urban population over
total61 80-07
Share of Industry, Services, Agriculture on GVA % 61 80-07
Canning (1998) and Canning and
Farahani (2007), extended with WB
World Development Indicators . For
electricity, 2006 from the United
Nations’ Energy Statistics.
World Development Indicators
World Development Indicators
Variable Units Source
Coverage
12
Annex: Results
Regressions at a glance
Note: Panel estimation. Telecoms and Energy regressions include temporal fixed effects. Bold, significant at 5 per cent
Source: Balmaseda et al. (2010)
Empirics
Energy
Water Sanitation Electricity Roads Railways Telephones PC Internet
Income pc + + + + + + + +
Income pc2 - - - - - -Urbanization + + + +
Density + + + + + + + +
Services + + + + + + +
Industry + + + + + +
Basic Transport Telecommunications
13
Annex: Results
Results at a glance
Observed / Pattern
(%, weighted average)
Basic Energy Transport Telecos Total
LatAm 115% 55% 26% 103% 81%
Emerging Asia 79% 53% 55% 204% 117%
Eastern Europe 100% 125% 247% 161% 163%
Developed 102% 143% 185% 75% 118%
Source: Balmaseda et al. (2010)