Making the Most of Public Investment in MENA and CCA Oil-Exporting Countries
Staff Discussion Notes, November 12, 2014
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Bibliographic details
- Authors: Maria A Albino-War, Svetlana Cerovic, Francesco Grigoli, Juan C Flores, Javier Kapsoli, Haonan Qu, Yahia Said, Bahrom Shukurov, Martin Sommer, SeokHyun Yoon
- Published: November 12, 2014
- Series: Staff Discussion Notes
- DOI: https://doi.org/10.5089/9781498311397.006
Summary and central findings
- Over the past decade, rising oil prices have translated into high levels of public investment in most MENA and CCA oil exporters.
- High public investment has raised questions about:
- the efficiency of public investment in generating growth and closing infrastructure gaps, and
- fiscal vulnerabilities associated with inefficient investment.
- When public investment is inefficient, higher levels of spending may simply lead to larger budget deficits, "without sufficiency increasing the quantity or quality of public infrastructure in support of economic growth."
- The analysis confirms that these oil exporters have substantial room to improve public investment efficiency.
- Reforms in the public financial and investment management systems are needed to achieve improved public investment efficiency.
Methods and analytical approach
- The paper examines public investment efficiency using several techniques, including:
- a novel application of the efficiency frontier analysis,
- estimates of unit investment costs, and
- assessments of public investment processes.
Policy implications and recommendations
- Improve public financial management systems to reduce fiscal vulnerabilities from inefficient public investment.
- Strengthen public investment management systems and processes to raise the quantity and quality of infrastructure delivered per unit of investment.
- Use findings from efficiency frontier analysis and unit-cost benchmarking to target reforms and prioritize projects that yield higher returns and lower unit costs.
Keywords and topical coverage
- Capital spending
- diminishing returns on investment
- efficiency
- Infrastructure
- investment decision and investment efficiency
- investment project management
- unit investment cost
- natural resources and resource wealth management
- Public investment and public-private partnerships (PPP)
- Public investment spending
Source: Making the Most of Public Investment in MENA and CCA Oil-Exporting Countries, Staff Discussion Note (November 12, 2014).