Hungary, Romania, Bulgaria: Lower EU Funding to Hit Hungary, Bulgaria; Romania Could Overheat
Economic growth in Hungary and Bulgaria will likely decelerate in 2016 due to a slowdown of public investment financed by EU funds. The Romanian economy, meanwhile, is expected to grow faster on the back of additional fiscal stimulus.
The search of factors positively influencing on GDP and which is able to bring economy to higher and more stable economic dynamics, is a topical issue nowadays. The article analyzes how different component of government expenditures and private expenses may influence on the increase of production dynamics. The author also valuated the results of increasing investments level on economic growth for both government and private sources under different directions of use, volumes and effectiveness. Moreover this article reviews the influence of proportion between current and capital expenses in investment over GDP and the advantages of increasing the innovation component within the investment.
This book contains a unique collection of studies on key economic and social policy challenges faced by countries of the Southern and Eastern Mediterranean region in a short- and long-term perspective. Prepared within the EU funded FP7 project on „Prospective Analysis for the Mediterranean Region (MEDPRO)” conducted in 2010-2013 it takes account on recent political developments in the region (Arab Spring) and their potential consequences. It covers a broad spectrum of topics such as factors of economic growth, macroeconomic and fiscal stability, trade and investment, Euro-Mediterranean and intra-regional economic integration, private sector development and privatizations, infrastructure, tourism, agriculture, financial sector development, poverty and inequality, education, labor market and gender issues.
Mechanisms of public-private partnership are the good alternative for conservative methods of infrastructure projects financing. Despite the fact that the subject of PPP is not new, the PPP is not prevalent neither in Russia, nor in the world. The application of this approach is able to speed up the economic development and raise the investment attractiveness. This is due to the combination of different opportunities from the government financing and the advantages of project implementation by private sector.
Paper analyses the problem of public infrastructure investment efficiency, including prerequisites, budget risks, best practices of other countries and some ways of addressing this issue. First part compares cost of investment and resulting quality of infrastructure. On this basis author concludes that efficiency of investment in infrastructure in Russia is rather low compared with developed and some developing countries. Further paper examines prerequisites of this phenomenon. All effects are divided into two levels: operational (high costs of projects implementation) and strategic (inefficient decisions). Third part of the paper deals with impact of inefficient investment policy on budget risks. In particular, author looks at such decision as investing National Wealth Fund in infrastructure projects and analyses it using existing evidence on implementation of large infrastructure projects. The fourth part proposes ways to increase efficiency of investment and reduce the risk. Paper concludes that Russia has a great potential to foster efficiency of public investment in infrastructure, at the operational as well as at the strategic level. This will facilitate reduction of corresponding budget risks, in particular, risk of non-return and risk of value increase. The former will be realized through more accurate and objective project selection process. The latter will come into effect though the improvement of monitoring system.
The study has two major focuses. The first one is of a methodological kind: we investigate the capabilities of a formal dynamic model to link theory and empirical estimation techniques. The other one is much more specified: we deal with the problems of public good provision and public capital accumulation and depreciation. Tying it all together, we demonstrate how formal theory can adjust the evaluation of public investment efficiency.
The first part of the paper presents the dynamic formal model construction. The core of it is Cobb-Douglas production function with public and private capital as input factors. Public capital stock is increased by budget investment inflow. A set of parameters which regulate system’s efficiency enters the model. They are total factor productivity, public investment effectiveness and the efficiency of public assets’ maintenance and utilization. We also define a special policy space of the model.
In the major part of the paper we examine the data, generated by various models with different efficiency parameter values, via Data envelopment analysis (DEA). We demonstrate that the best estimates are obtained when we use cumulative inputs (the sum of budgets investments over a few time periods). Thus we show that dynamic formal model analysis can make a practical contribution to estimation techniques’ “fine tuning”.