Benchmarking Infrastructure Using Public Investment Efficiency Frontiers

By Javier Kapsoli, Tewodaj Mogues, Genevieve Verdier

May 12, 2023

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Format: Chicago

Javier Kapsoli, Tewodaj Mogues, and Genevieve Verdier. Benchmarking Infrastructure Using Public Investment Efficiency Frontiers, (USA: International Monetary Fund, 2023) accessed November 21, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

With limited financing options, increasing investment efficiency will be a critical avenue to building infrastructure for many countries, particularly in the context of post-pandemic recovery and rising debt emanating from higher energy costs and other pressures. Estimating investment efficiency, however, presents many methodological pitfalls. Using various methods—–stochastic frontier analysis, data envelopment analysis (DEA), and bootstrapped DEA—this paper estimates efficiency scores for a wide range of countries employing metrics of infrastructure quantity and utilization. We find that efficiency scores are relatively robust across methodologies and data used. A considerable efficiency gap exists: Removing all inefficiencies could increase infrastructure output by 55 percent overall, when averaging across 12 estimation approaches—in particular, by 45 percent for advanced economies, 54 percent for emerging countries, and 65 percent for low income countries. Infrastructure output would increase by a still-sizeable 30 percent if instead of eliminating all efficiency, countries achieved the efficiency level of their income group’s 90th percentile.

Subject: Expenditure, Financial institutions, Income, Infrastructure, National accounts, Public investment spending, Stocks

Keywords: Benchmarking, Benchmarking infrastructure, Caribbean, Data envelopment analysis, Efficiency, Income, Income group, Infrastructure, Infrastructure output, Output index, Public investment, Public investment spending, Stocks

Publication Details

Pages:

32
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2023/101
Stock No:

WPIEA2023101
ISBN:

9798400243196
ISSN:

1018-5941

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