Transcript Economic Issues in PPPs

Financing of Transportation Investment:
A Macroeconomic Perspective
Timo Välilä (EIB)
Tomasz Kozluk (EUI)
Aaron Mehrotra (EUI)
Outline
1.
Introduction
2.
Evolution of public transportation investment
3.
Determinants of public transportation investment
4.
Significance of PPPs in roads sector
5.
Conclusions
Public Investment to GDP
%
6.0
UK
France
Italy
Germany
5.0
4.0
3.0
2.0
1.0
1970
1975
Source: OECD
1980
1985
1990
1995
2000
Public Transportation Investment to GDP
%
2.0
Germany
France
Italy
UK
1.5
1.0
0.5
0.0
1970
Source: Eurostat
1975
1980
1985
1990
1995
Determinants of public transportation
investment:Model specification
gfcft = α + β1yt-1 + β2 rt-1 + β3 debtt-1 + β6currect-1 + β7curdist-1 +ut
Determinants of public transportation
investment:Estimation results
all sectors education
y
0.0561
0.0122
(6.02)
(4.07)
r
0.0113
-0.0069
(0.69)
(-1.31)
debt
-0.0166
0.0127
(-2.81)
(6.64)
current receipts
0.0120
0.0023
(0.40)
(0.23)
current disbursements 0.0361
-0.0002
(1.23)
(-0.02)
adjusted R2
0.87
0.93
observations
73
72
health
0.0014
(0.61)
-0.0094
(-2.38)
0.0018
(1.25)
0.0078
(1.07)
-0.0084
(-1.18)
0.63
transport
0.0127
(2.93)
-0.0111
(-1.46)
0.0187
(6.79)
0.0071
(0.51)
0.0080
(0.58)
0.94
73
73
Signed value of PPPs to public investment
(“apples vs. oranges”, average 1995-2003)
25
20
15
10
5
0
%
Greece
Ireland
Italy
Netherlands
Portugal
Spain
UK
Signed value of road PPPs to
total transportation investment
(“apples vs. oranges”, average 1995-2003)
10
%
9.6
32.3
8
Austria
Greece
Portugal
UK
6
4
2
1.1
0.3
0
Conclusions
• Public transportation investment has defied the long-term
downtrend in overall public investment as it has not
reacted to fiscal sustainability concerns.
• Public transportation investment is chiefly determined by
national income (GDP).
• Privately financed infrastructure in roads sector remains
systemically insignificant, except for the UK and Portugal.
• All in all, there has been no major structural change in the
financing of transportation (road) infrastructure.