Modeling the Impact of Large Infrastructure Projects : A Case Study from Niger--Macroeconomic Assessment of Public Investment Options
Evidence illustrates that investment in infrastructure is essential to accelerate inclusive growth. Indeed, a number of Sub-Saharan African (SSA) countries have begun to devote greater resources to large-scale public investment projects. Neverthele...
| Main Authors: | , , , , |
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| Format: | Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2015
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2015/11/25247595/modeling-impact-large-infrastructure-projects-case-study-niger-macroeconomic-assessment-public-investment-options-mapio http://hdl.handle.net/10986/22920 |
| Summary: | Evidence illustrates that investment in
infrastructure is essential to accelerate inclusive growth.
Indeed, a number of Sub-Saharan African (SSA) countries have
begun to devote greater resources to large-scale public
investment projects. Nevertheless, while massive projects
can potentially generate large benefits there are
considerable risks. Cost overruns, poor implementation
quality, inadequate operational and maintenance capacity,
and negative social or environmental impacts can severely
undercut a project’s anticipated social and economic
returns. Moreover, projects, which are expensive to develop
and maintain can impact on debt dynamics and in some cases
macroeconomic stability. Yet, given the complex nature of
such projects it is often difficult to ascertain whether it
is worthwhile to proceed with a project and if so, how
should it be financed and implemented. Historically,
computable general equilibrium (CGE) models have been used
to assess the prospective impacts of large public investment
projects. However, such models are a complex and
time-consuming process and are often too broad to precisely
capture the localized impact of specific projects. This
paper proposes a simple, but more user-friendly model. By
inputting information on the project’s construction,
operation, and anticipated returns, the user is able to
assess the project’s net impact on the economy and weigh up
the costs and benefits of different approaches. The model
was developed in response to a request from the Nigerien
authorities to assess the macroeconomic impact of Niger’s
Kandaji Dam project. It found that while costs would equal
more than 10 percent of 2013 GDP during 2014-48, the
expansion of domestic production spurred by increased demand
during the construction phase will increase GDP by 0.25
percent above the baseline projection and boost fiscal
revenues by an additional 0.45 percentage points of GDP. |
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