Modeling the Impact of Large Infrastructure Projects : A Case Study from Niger--Macroeconomic Assessment of Public Investment Options

Beguy, Olivier; Dessus, Sébastien; Garba, Abdoulahi; Hayman, Jason; Herderschee, Johannes

Modeling the Impact of Large Infrastructure Projects : A Case Study from Niger--Macroeconomic Assessment of Public Investment Options

2015

Beguy, Olivier | Dessus, Sébastien | Garba, Abdoulahi | Hayman, Jason | Herderschee, Johannes

Evidence illustrates that investment in infrastructure is essential to accelerate inclusive growth. Indeed, a number of Sub-Saharan African (SSA) countries have begun to devote greater resources to large-scale public investment projects. Nevertheless, while massive projects can potentially generate large benefits there are considerable risks. Cost overruns, poor implementation quality, inadequate operational and maintenance capacity, and negative social or environmental impacts can severely undercut a project’s anticipated social and economic returns. Moreover, projects, which are expensive to develop and maintain can impact on debt dynamics and in some cases macroeconomic stability. Yet, given the complex nature of such projects it is often difficult to ascertain whether it is worthwhile to proceed with a project and if so, how should it be financed and implemented. Historically, computable general equilibrium (CGE) models have been used to assess the prospective impacts of large public investment projects. However, such models are a complex and time-consuming process and are often too broad to precisely capture the localized impact of specific projects. This paper proposes a simple, but more user-friendly model. By inputting information on the project’s construction, operation, and anticipated returns, the user is able to assess the project’s net impact on the economy and weigh up the costs and benefits of different approaches. The model was developed in response to a request from the Nigerien authorities to assess the macroeconomic impact of Niger’s Kandaji Dam project. It found that while costs would equal more than 10 percent of 2013 GDP during 2014-48, the expansion of domestic production spurred by increased demand during the construction phase will increase GDP by 0.25 percent above the baseline projection and boost fiscal revenues by an additional 0.45 percentage points of GDP.

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Mots clés AGROVOC

agriculture balance of payments budget capital consumption costs debt deficit demand developing countries development development strategy economic development economic sectors economic value elasticity exchange rate expenditure exports external debt finance fixed capital gross domestic product growth rate inflation instruments interest rates international bank inventories investment investment policies liabilities loans macroeconomic analysis macroeconomics monopolies poverty prices private investment projections public debt public investment repayment returns side effects stock stocks structural change supply taxation taxes trade

Informations bibliographiques

Editeur

World Bank, Washington, DC

D'autres materias

Global trade; National economy; Contingent liabilities; Investments; Gdp; Foreign loans; Elasticity of supply; Expenditures; Purchasing power; Rate of return; Payments; Macroeconomic risks; Foreign financing; Multiplier effects; Internal rate of return; Monetary fund; Revenues; Economic functions; Debt service; Value; Marginal propensity to consume; Central bank; Investment spending; Debt relief; Marginal propensity to save; Investment policy; Amortization; Growth projections; Infrastructure development; Finances; Internal rates of return; Fiscal deficit; Total debt; Return; Natural monopolies; Currency; Goods; Macroeconomic instability; Benefits; Aggregate demand; Macroeconomic analyses; Consumer price index; Future; Debt service payments; Aggregate supply; Market failure; Share of investment; Infrastructure investment; International development; Revenue; Alternative investment; Capital investment; Marginal propensity to import; Fixed exchange rate; Gdp deflator; Real exchange rate; Recurrent expenditures; Real gdp; Competitiveness; Agricultural output; Influence; Exchange; Transparency; Price changes; Tax revenues; Rates of return; Government spending; Macroeconomic variables; Human development; Failures; International capital; Foreign debt; Variables; Market; Monetary policy; Interest rate; Investment strategies; Repayment period; Domestic debt; Tax; Loan; Borrowing cost; Market failures; Interest; Share; Guarantee; Domestic capital; Development strategies; Debt ratios; Collateral; Investment rate; Net exports; Debt financing; Macroeconomic stability; Investment projects; Loan terms; Gdp per capita; Basis points; Public spending; Debt stock; Options

Licence

CC BY 3.0 IGO. http://creativecommons.org/licenses/by/3.0/igo/. World Bank

Type

Working Paper; Publications & Research :: Working Paper; Publications & Research

Source

MFM Global Practice discussion paper,no. 7;

Sur AGRIS depuis: 2022-09-15

Format: AGRIS AP

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