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Public Infrastructure Investment and Fiscal Sustainability in Latin America: Incompatible Goals?

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  • Luis Carranza
  • Christian Daude
  • Ángel Melguizo

Abstract

Latin American countries exhibit a significant gap in infrastructure stocks, due to low and in many cases inefficient public investment, which is furthermore not compensated by private sector projects. In this paper we analyse trends in public and total infrastructure investment in six large Latin American economies, in the light of fiscal developments since the early eighties. We argue that post-crisis fiscal frameworks, notably fiscal rules which are increasingly popular in the region, should not only consolidate the recent progress towards debt sustainability, but also create the fiscal space to close these infrastructure gaps. These points are illustrated in a detailed account of recent developments in the fiscal framework and public investment in the Peruvian case. Les pays d'Amérique latine présentent une lacune importante dans les stocks d'infrastructure, à cause des faibles et nombreux cas d'investissements publics inefficaces, ce qui n'est compensée par les projets du secteur privé. Dans ce document, nous analysons les tendances publiques et total d'investissement des infrastructures dans six grandes économies latino-américaines, à la lumière de l'évolution fiscal depuis les années quatre vingt. Nous soutenons que les cadres de post-crise fiscales, notamment les règles fiscales qui sont de plus en plus populaire dans la région, devrait non seulement consolider des progrès récemment accomplis vers la viabilité de la dette, mais aussi de créer l'espace budgétaire pour combler ces lacunes dans l'infrastructure. Ces points sont illustrés dans un compte détaillé de l'évolution récente dans le cadre fiscal et l'investissement public dans le cas du Pérou.

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Bibliographic Info

Paper provided by OECD Publishing in its series OECD Development Centre Working Papers with number 301.

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Date of creation: 07 Jun 2011
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Handle: RePEc:oec:devaaa:301-en

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Keywords: fiscal rules; Latin America; fiscal policy; infrastructure; politique budgétaire; infrastructure; Amérique latine;

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