Transcript State of infrastructure in Latin America - Inter

Managing infrastructure for social and productive
development
IDB Seminar
Development Challenges and Policies in Latin America and the Caribbean: What are the issues?
Pablo Sanguinetti
Research Director
Corporación Andina de Fomento
Washington, September 10-11 2009
Presentation Structure
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Introduction: Why infrastructure?
A brief diagnosis of the state of infrastructure in Latin
America
Main messages of the Report
Impact evaluation of infrastructure services
Improving management
Final remarks
Why infrastructure?
In the current context of Latin
American countries, improvement in
the quantity and quality of
infrastructure has an enormous
importance:
•
Declining participation in global trade
(RED2005)
•
Widening productivity gap with developed
countries and other developing regions
(Asia) (RED2006)
•
Persistent poverty and inequality
(RED2007-2008)
•
Infrastructure is currently on the agenda of
developed and developing countries and
multilateral organizations.
State of infrastructure in Latin America
Although its relevance is widely
recognized, infrastructure services in
Latin America are insufficient both in
quantity and quality.
State of infrastructure in Latin America
Slow convergence to OECD country levels …
Electricity production per capita with respect to OECD
Electricity production per capita (Kwh)
350
East Asia & Pacific
Latin America & Caribbean
South Asia
Sub-Saharan Africa
250
Middle income
Middle East & North Africa
200
150
100
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
1986
1985
1984
1983
1982
1981
50
1980
Index 1980=100
300
Source: Own calculations based on World Bank (2007)
State of infrastructure in Latin America
Slow convergence to OECD country levels …
Fixed line and mobile phone subscribers with respect to OECD
East Asia & Pacific
Latin America & Caribbean
South Asia
Sub-Saharan Africa
Middle income
Middle East & North Africa
800
600
400
200
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
0
1990
Index 1990=100
1.000
Fixed line and mobile phone subscribers (per 1,000 people)
Source: Own calculations based on World Bank (2007)
State of infrastructure in Latin America
The challenge of improving quality of services in Latin America
Infrastructure Quality Index by region / 134 countries
7,00
SSA
LAC
4,00
AP
score (1-7)
5,00
NAE
MENA
6,00
3,00
2,00
1,00
0,00
North America and Europe
Middle East and North Africa
Asia and the Pacific
Latin America and the Caribbean
Sub-Saharian Africa
Sw
itz
er
D lan
en d
m
a
N Ice rk
et la
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rla d
Au nd
Br
st s
un
ra
ei
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us ain
sa
la
m
K
El u
S w
G al ait
am va
bi do
a, r
Th
e
A
D
om K Ire P
in az lan
ic ak d
an h
R sta
e n
Zi pub
m li
ba c
M
ac G b w
e
e
Ky do uya
rg nia na
yz , F
R Y
M ep R
ad ub
ag lic
as
c
Po ar
la
M nd
al
Le aw
so i
t
Bo ho
liv
ia
C
ha
d
NAE
MENA
AP
LAC
SSA
Note: The score for regions was calculated by averaging countries belonging to that region
Source: WEF 2008
State of infrastructure in Latin America
The challenge of improving quality of services in Latin America
Quality of electricity infrastructure
(1 to 7 scale)
Number of electrical outages by region
(days)
South Asia
North America and
Europe
Sub-Saharan
Africa
North Africa and the
Middle East
Middle East &
North Africa
Latin America &
Caribbean
Asia and the Pacific
Europe & Central
Asia
Latin America and The
Caribbean
East Asia & Pacific
Sub-Saharan Africa
OECD
0,00
1,00
2,00
3,00
4,00
5,00
6,00
7,00
Source: Own calculations based on WEF (2008) and World Bank (2006)
0
20
40
60
80
Days
100
120
140
State of infrastructure in Latin America
The challenge of improving quality of services in Latin America
Infrastructure sector scores per region
Quality of road infrastructure
Quality of airport infrastructure
North America and
Europe
North Africa and the
Middle East
North Africa and the
Middle East
North America and
Europe
Asia and the Pacific
Asia and the Pacific
Latin America and The
Caribbean
Latin America and The
Caribbean
Sub-Saharan Africa
Sub-Saharan Africa
0,00
1,00
2,00
3,00
4,00
5,00
6,00
0,00
7,00
Quality of railroad infrastructure
1,00
2,00
3,00
4,00
5,00
6,00
7,00
5,00
6,00
7,00
Quality of port infrastructure
North America and
Europe
North America and
Europe
Asia and the Pacific
North Africa and the
Middle East
North Africa and the
Middle East
Asia and the Pacific
Latin America and The
Caribbean
Sub-Saharan Africa
Latin America and The
Caribbean
0,00
Sub-Saharan Africa
1,00
2,00
3,00
4,00
5,00
6,00
7,00
0,00
1,00
Source: Own calculations based on WEF (2008)
2,00
3,00
4,00
State of infrastructure in Latin America
Perceptions regarding quality of services vary widely across cities in Latin
America
Quality indicators in Latin America (% of households)
Source: CAF survey (2008)
State of infrastructure in Latin America
In the context of the previous
evidence on the quantity and
quality of infrastructure in
the region, how has
investment evolved?
Public
2,5
2,0
1,5
1,0
0,5
0,0
7,0
6,0
Public
Public
Private
5,0
4,0
3,0
2,0
1,0
0,0
3,0
2,5
2,5
2,0
2,0
1,5
1,5
1,0
1,0
0,5
0,5
0,0
0,0
Private
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
3,5
3,0
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
4,0
Argentina
Chile
4,5
4,0
3,5
3,0
2,5
2,0
1,5
1,0
0,5
0,0
Mexico
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
State of infrastructure in Latin America
Overall infrastructure investment has decreased…
Infrastructure investment (public and private) as a percentage of GDP
6,0
Brazil
Private
5,0
Public
Public
Public
Private
4,0
3,0
2,0
1,0
0,0
Colom bia
Private
3,0
Peru
Private
State of infrastructure in Latin America
There is a correlation between fiscal adjustments and public infrastructure investment
Public investment in infrastructure and fiscal deficit as a percentage of GDP
Chile
Argentina
2,5
18
0
1,2
0,8
8
0,6
6
4
0,4
2
0
0,2
-2
2,0
-4
-6
1,5
-8
1,0
-10
-12
0,5
-14
-2
Public infrastructure
Fiscal deficit
Public infrastructure
Colombia
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1990
-16
1991
0,0
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
-4
1990
0,0
Fiscal deficit (% GDP)
1,0
14
12
10
Public investment in
infrastructure (% GDP)
16
Fiscal deficit (% GDP)
Public investment in
infrastructure (% GDP)
1,4
Fiscal deficit
Peru
3,0
6
1,0
5
2,0
1,5
2
1,0
0
0,5
0,8
0,7
3
0,6
0,5
0,4
1
0,3
0,2
0,1
Public infrastructure
Fiscal deficit
Public infrastructure
Source: Own calculations based on Calderon and Serven (2008) and official data
Fiscal deficit
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
-2
1991
0,0
1990
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
-2
1990
0,0
Fiscal deficit (% GDP)
4
Public investment in
infrastructure (% GDP)
2,5
Fiscal deficit (% GDP)
Public investment in
infrastructure (% GDP)
0,9
Main messages of the report
1. Since infrastructure is such an important
element for the development process, one
needs a better understanding of the factors
underlying the link between infrastructure and:
•
•
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Households’ quality of life,
Productivity of firms and industries and international trade,
Environment
It is important to undertake rigorous impact
evaluations analyses. This will provide: better
information for decision-making; enrich public
debates; improved ex-ante evaluations and
more efficient public spending.
Main messages of the report
2. Improve management process both at the public
and private level. This implies:
•
To have a comprehensive vision of the different
intervention mechanisms:
- New investment
- Maintenance
- Administration of existing infrastructure facilities
•
Strengthening institutions associated with
planning, evaluating, regulating and supervising
infrastructure services.
Detailed content of the book
1.
Managing infrastructure for social and productive
development (intro chapter)
2.
Infrastructure and welfare: reaching households
3.
Paths for productive transformation
4.
Environmentally sustainable infrastructure?
5.
Options for the provision of infrastructure: Latin
America experiences (regulatory models)
6.
Access and equality
Impact
analysis
Management
7.
Partnering with the private sector: risk sharing and
efficiency
8. Achieving prosperity: the role of institutions
Impact of infrastructure
Impact of infrastructure
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Proper impact evaluation will ensure better
infrastructure project selection. However, causality
remains an important challenge.
•
Sector complementarities must be considered (e.g.
water and electricity) and tradeoffs among different
types of policies must be analyzed (e.g. new
investment vs. maintenance).
Electricity generation in Brazil
Yellos dots: Actual location (1967)
of hydroelectric generating plants
Red dots: Model-predicted location
based on geological factors
- This model helps to
measure the impact of
electricity generation linked
to supply-related factors
(geology and technological
restrictions)
- Electricity generation
improves productivity and
attracts a larger population
(population density may
double each decade)
Natural gas in Buenos Aires
Yellow border: Cuartel V
Blue border: study area
Treatment group
Control group
- Treatment and control groups
were similar, at least until the
program was applied
- Direct access to natural gas
resulted in lower incidence of
respiratory and gastrointestinal
diseases
- Complementary factors: social
capital, housing improvements
Improving Infrastructure
management
Improving Infrastructure management
•
An adequate management of infrastructure depends on the
nature of the established institutional and regulatory
framework. The private sector has been and could be a key
player.
•
The public sector should be capable of planning,
evaluating, regulating and overseeing infrastructure
investments, both public and private.
- Examples of planning institutions: multiyear planning in
Brazil; “Botton Up” Territorial Planning in Colombia
- Examples of evaluating schemes : SNIP legislation in
Peru.
Public Private Partnerships
•
Public Private Partnerships (PPP) have had an
increasing role in infrastructure provision
- Intermediate approach between outright privatization and
traditional public provision (pubic work contracts).
- They can be applied even for projects that user tariffs
would not cover all cost. Public sector could participate cofinancing the project. Example: highways.
- PPP´s main advantage is enabling better risk distribution
(allocation rules) and efficiency gains (bundling).
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Public Private Partnerships
•
Institutional scheme for better management of
PPPs:
- Strategic planning and project identification: sector
ministries (transport, etc.)
- Priorization or coordination: Finance ministries or
National Planning Departments (fiscal consequences)
- PPP agencies in charge of attracting private sector
participants and designing contracts
- Independent regulatory agencies: Contract enforcement
and information on service provision
- Monitoring: ex-post impact evaluation by NSPI in
collaboration with local universities.
Regulatory aspects
•
Infrastructure characteristics justify regulation and
determine specific regulatory schemes:
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•
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Size and maturity of investments
Scale and scope economies
Network effects
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There is no single regulatory model.
•
Regulation encompasses a broad scope of variables and
parameters: prices, quality, investments, public subsidies,
procurement, property schemes, etc.
•
Regulate quality standards when cost efficiency may lead
to quality reduction.
•
Regulation should not limiting competition in those
segments/markets that this is feasible (electricity
generation). It may also meeting social objectives.
Final Remarks
•
Infrastructure plays a key role in development. That is why
we need to have a better understanding of the factors
underlying this link, and the mechanisms through which
this relation takes form. This will ultimately lead to better
selection of projects and evaluation methods.
•
Need for improving infrastructure service management
both in the public and the private sector.
•
This requires strengthening institutions associated with
planning, evaluating, regulating and supervising
infrastructure services.
•
A well designed PPP regimen and legislation could improve
the social gains associated with private sector participation
in infrastructure.
http://www.caf.com