Impact Of Infrastructure Spending In Sub-Saharan Africa: A Cge Modeling Approach
AbstractIn this paper we construct an archetype CGE model and apply it to six sub-Saharan African countries to explore the impact of scaling up infrastructure in African countries. As part of the debate on the importance of scaling up infrastructure to stimulate growth and provide a push to African economies, some analysts have raised concerns on providing massive financing for the construction of these infrastructures as the process can create major distortion in the economies and have a negative impact by creating Dutch disease symptoms (Adam and Bevan 2006). This study aims to provide some insight into this debate. It draws from the infrastructure productivity literature to postulate positive productive externalities of new infrastructure and Fay and Yepes (2003) for operating cost associated with new infrastructure. We compare various infrastructure investment funded with different fiscal tools. These investments scenarios are compared to non productive investment that can be interpreted as a business as usual scenario. Our results show that increase in infrastructure investment does produce slight Dutch disease effects but the negative impacts are strongly dependent on the type of investments performed and type of financing scheme used. Moreover, the growth effects we introduced contribute to attenuate the negative effects.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Departement d'Economique de la Faculte d'administration à l'Universite de Sherbrooke in its series Cahiers de recherche with number 08-03.
Length: 40 pages
Date of creation: 2008
Date of revision:
Investment externalities; foreign aid; exchange rate; fiscal reforms;
Find related papers by JEL classification:
- C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
- D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
- E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
- F35 - International Economics - - International Finance - - - Foreign Aid
- H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
This paper has been announced in the following NEP Reports:
- NEP-AFR-2008-05-17 (Africa)
- NEP-ALL-2008-05-17 (All new papers)
- NEP-CMP-2008-05-17 (Computational Economics)
- NEP-MAC-2008-05-17 (Macroeconomics)
- NEP-PBE-2008-05-17 (Public Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Christopher Adam & David Bevan, 2004.
"Aid and the Supply Side: Public Investment, Export Performance and Dutch Disease in Low Income Countries,"
Economics Series Working Papers
201, University of Oxford, Department of Economics.
- Christopher S. Adam & David L. Bevan, 2006. "Aid and the Supply Side: Public Investment, Export Performance, and Dutch Disease in Low-Income Countries," World Bank Economic Review, World Bank Group, vol. 20(2), pages 261-290.
- Barro, R.J., 1989.
"Economic Growth In A Cross Section Of Countries,"
RCER Working Papers
201, University of Rochester - Center for Economic Research (RCER).
- Alicia H. Munnell, 1990. "Why has productivity growth declined? Productivity and public investment," New England Economic Review, Federal Reserve Bank of Boston, issue Jan, pages 3-22.
- Gramlich, Edward M, 1994. "Infrastructure Investment: A Review Essay," Journal of Economic Literature, American Economic Association, vol. 32(3), pages 1176-96, September.
- Jung, Hong-Sang & Thorbecke, Erik, 2003. "The impact of public education expenditure on human capital, growth, and poverty in Tanzania and Zambia: a general equilibrium approach," Journal of Policy Modeling, Elsevier, vol. 25(8), pages 701-725, November.
- Jim Davies, .
"Empirical Evidence on Human Capital Externalities,"
Working Papers-Department of Finance Canada
2003-11, Department of Finance Canada.
- Jim Davies, 2003. "Empirical Evidence on Human Capital Externalities," University of Western Ontario, Economic Policy Research Institute Working Papers 20035, University of Western Ontario, Economic Policy Research Institute.
- Peter J. Klenow & Mark Bils, 2000. "Does Schooling Cause Growth?," American Economic Review, American Economic Association, vol. 90(5), pages 1160-1183, December.
- Terry McKinley, 2005. "Why is ?The Dutch disease? always a disease? the macroeconomic consequences of scaling up ODA," Working Papers 10, International Policy Centre for Inclusive Growth.
- Anderson, James E. & Martin, Will, 1998. "Evaluating public expenditures when governments must rely on distortionary taxation," Policy Research Working Paper Series 1981, The World Bank.
- Fougere, Maxime & Merette, Marcel, 1999. "Population ageing and economic growth in seven OECD countries," Economic Modelling, Elsevier, vol. 16(3), pages 411-427, August.
- Andrew Berg & Rafael Portillo & Edward F. Buffie & Catherine A. Pattillo & Luis-Felipe Zanna, 2012. "Public Investment, Growth, and Debt Sustainability: Putting Together the Pieces," IMF Working Papers 12/144, International Monetary Fund.
- Luc Savard, 2010.
"Scaling up infrastructure spending in the Philippines: A CGE top-down bottom-up microsimulation approach,"
International Journal of Microsimulation,
Interational Microsimulation Association, vol. 3(1), pages 43-59.
- Luc Savard, 2010. "Scaling up Infrastructure spending in the Philippines: A CGE top-down/bottom up microsimulation approach," Cahiers de recherche 10-06, Departement d'Economique de la Faculte d'administration à l'Universite de Sherbrooke.
- Kate Bayliss, 2009. "Private Sector Participation in African Infrastructure: Is it Worth the Risk?," Working Papers 55, International Policy Centre for Inclusive Growth.
- Dorothée Boccanfuso & G. Rodolphe A. Missinhoun & Luc Savard, 2010.
"Réformes économiques et croissance pro-pauvre : une application macro-micro aux Philippines,"
Discussion Papers (REL - Recherches Economiques de Louvain)
2010032, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
- Dorothée Boccanfuso & G. Rodolphe A. Missinhoun & Luc Savard, 2010. "Réformes economiques et croissance pro-pauvre : une application macro-micro aux Philippines," Recherches économiques de Louvain, De Boeck Université, vol. 76(3), pages 257-288.
- Dorothée Boccanfuso & Rodolphe Missinhoun & Luc Savard, 2007. "Reformes Economiques Et Croissance Pro-Pauvre : Une Application Macro-Micro Aux Philippines," Cahiers de recherche 07-17, Departement d'Economique de la Faculte d'administration à l'Universite de Sherbrooke.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Luc Savard).
If references are entirely missing, you can add them using this form.