Abstract

Infrastructure contributed 0.6 percentage points to Ethiopia's annual per capita gross domestic product (GDP) growth over the last decade. Raising the country's infrastructure endowment level to that of the region's middle-income countries could lift annual growth by an additional 3 percentage points. This will represent a significant boost over the growth performance of the mid-2000s, which averaged around 5 percent. The Africa Infrastructure Country Diagnostic (AICD) has collected and analyzed extensive infrastructure data for more than 40 Sub-Saharan countries, including Ethiopia. The results are presented in reports on various infrastructure sectors Information and Communication Technologies (ICT), irrigation, power, transport, water and sanitation and policy areas, including investment needs, fiscal costs, and sector performance. This country report presents the key AICD findings for Ethiopia. This will allow its infrastructure situation to be benchmarked against that of other African nations that, like Ethiopia, are low-income countries, with particular emphasis on immediate regional neighbors in East Africa. Several methodological issues should be borne in mind. First, the cross country nature of the data collection creates an inevitable time lag. The period covered by the AICD runs from 2001 to 2006. Most technical data are presented for 2006 (or the most recent year available), while financial data typically are averaged over the available period to smooth out the effect of short term fluctuations. Second, cross country comparisons require standardization of the indicators and the analysis to ensure consistency. Therefore, some of the indicators may be slightly different from those that are routinely reported and discussed at the country level. During the 2000s, Ethiopia's annual economic growth has averaged 4.8 percent, compared with only 0.5 percent in the previous decade. Notwithstanding this improvement, current annual growth levels still fall short of the sustained 7 percent needed to meet the Millennium Development Goals. Improved structural and stabilization policies generated an estimated 4.2 percent of Ethiopia's improved per capita growth performance during the 2000s, and improvements in the country's infrastructure platform over that period contributed up to 0.6 percentage points to growth. This was due almost entirely to the introduction of mobile telephony in Ethiopia. Simulations suggest that if Ethiopia's infrastructure platform could be improved to the level of the African leader, Mauritius, annual per capita growth rates could increase by 3.8 percent. This potential impact would come equally from improvements to transport, power, and ICT infrastructure. Document type: Book

Abstract

This paper proposes a new measure of public expenditure force that policy makers and budget analysts should track in detail over time in routine fiscal monitoring. The paper suggests that adopting the measure will not only warn policy makers of possible impending fiscal pressures, but will help them to differentiate between those budgetary pressures that are temporary and those that may require reforms. The main utility of the expenditure force measure will be in country fiscal analysis. Measuring force across the entire budget allows practitioners to monitor and decompose the micro drivers of public spending pressure, watch out for rapidly expanding spending lines, and identify priorities for reform before these pressures lead to macro fiscal problems. Yet by its construct, spending force is internationally comparable, and independent of expenditure levels or spending types. This could allow global monitoring comparisons and global research into the drivers of public spending force across particular types of country characteristics and economic conditions. In time, and as more data become available, researchers can use the force measure to compare and contrast the dynamics of expenditure types across countries. For example the measure can be used to explore what gives some spending types an initial impulse; whether underlying factors cause different public spending categories to grow faster than average, or to accelerate over time; and what successful countries have done to manage rising force without damaging public services. Since force seems to be a decent predictor of fiscal episodes, it is suggested that “speed limits” for spending might be a feasible component of fiscal rules. Document type: Book

Abstract

The authors have assembled 1960–2012 infrastructure stock data from 145 countries to estimate the demand for infrastructure services in emerging markets and developing economies. This paper identifies that the required resource flows to satisfy new demand while maintaining service for existing infrastructure amounts to $836 billion or 6.1 percent of current gross domestic product per year over the period 2014–20. The annual infrastructure investment gap for emerging markets and developing economies is $452 billion per year, which implies that emerging markets and developing economies should almost double their current spending. The paper also estimates that half of the spending should be allocated to maintenance of existing assets. Acknowledging the challenges to compare infrastructure investment estimates across different methodologies, the authors recognize this result as a lower bound estimate and compare the results with others available in the literature. Document type: Book