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GTAP Resource #4079

"The Growth and Distributive Impacts of Public Infrastructure Investments in the Philippines"
by Taningco, Angelo, Erwin Corong, Lawrence Dacuycuy and Rachel Reyes

It has been widely perceived that physical infrastructure in the Philippines, such as in transportation and utilities, is of poor quality and has not improved much in recent years. One reason is that public investment on infrastructure has remained small amid fiscal constraints and scarce public resources. The Philippine government has embarked on policies that aim to promote infrastructure development and one of these is the public-private partnerships (PPP) program, which is the flagship policy agenda of the government that recognizes the private sector’s role as a catalyst of growth and as an important source of infrastructure financing. Meanwhile, official poverty statistics have shown the country’s poverty level inching up in the past years, and suggesting for a more inclusive growth that will help alleviate poverty and narrow income inequality.

Against this backdrop, our study aims to identify the potential macroeconomic, sectoral, and poverty impacts of public infrastructure investment over time. Using a dynamic general equilibrium-microsimulation model that explicitly models public capital as a production input, we find that the positive supply side effects of higher public investment expenditure manifest over time, through higher capital accumulation and improved productivity. Our findings reveal that higher public infrastructure investment not only positively impacts real GDP, but also reduces poverty and inequality in the short and long run. In this context, the Philippine government needs to become more proactive in finding ways to finance higher public investment expenditures. This is especially relevant with respect to international financing, given the narrow tax base in the country. Our simulation results confirm that international financing is a better alternative than tax financing when considered in terms of its ability to improve the economy’s physical infrastructure in order to create job opportunities, improve productivity and complem...

Resource Details (Export Citation) GTAP Keywords
Category: 2013 Conference Paper
Status: Published
By/In: Presented at the 16th Annual Conference on Global Economic Analysis, Shanghai, China; Partnership for Economic Policy (PEP)
Date: 2012
Created: Taningco, A. (4/8/2013)
Updated: Taningco, A. (4/8/2013)
Visits: 1,614
- Dynamic modeling
- Economic analysis of poverty
- Economic growth
- Other data bases and data issues
- Asia (Southeast)

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