On a recent trip to the library I picked up two books about the CIS that were written 12 years apart:
- "The Newly Independent States of Eurasia: Handbook of Former Soviet Republics" - Batalden, published by Oryx. (1993)
- "Russia and the Commonwealth of Independent States, 3rd Edition" - Shoemaker, published by Stryker-Post. (2005)
Flipping through them I wish they had more specific information and statistics, but it might be hidden in the paragraphs. For fun, I'll be going country by country to see what these two separate reports said over a decade apart.
Thursday, October 29, 2009
Wednesday, October 28, 2009
Thesis: The Model and Methodology
The method behind this thesis is actually a rather simple statistical model with a lot of data. For those interested in how I'm going to be calculating what types of project have the most significant impact, read on:
The original focus of my thesis was World Bank funding of projects in the CIS. Different types of projects yield different results, and there hasn't been a consistent way of measuring what types of projects have better impacts that I've seen in academia. Thus the statistical proposal is this:
There are approximately 600 World Bank projects listed on their project database (available online) for the CIS. I will take each project and give it it's own row in SPSS with the following information:
1. Name of Project
2. Date Project Proposed
3. Date Project Approved
4. Date Project Started
5. Date Project Completed
6. Funding Source
7. Country
8. External funding? (Dollar amount)
Then measures at (1) project start (2) project completion (3) 3 years after completion (4) 5 years after completion and (5) 10 years after completion for the following development measures: GDP,GNP, Per Capita Income, Human Development Index, GINI, Freedom House, Literacy Rate, and Life expectancy.
Hopefully with this amount of data trends will start emerging. Educational funding should impact literacy rates, but will roads also help them? Time lagging and SPSS should be able to try to find some sort of relationship with the numbers. As mentioned in previous posts, there's been mixed evidence on the impacts of transportation infrastructure funding.
If there is some trends that come out of this, there may be an argument to do a similar study for some private sector firms to see the differences if they exist.
The original focus of my thesis was World Bank funding of projects in the CIS. Different types of projects yield different results, and there hasn't been a consistent way of measuring what types of projects have better impacts that I've seen in academia. Thus the statistical proposal is this:
There are approximately 600 World Bank projects listed on their project database (available online) for the CIS. I will take each project and give it it's own row in SPSS with the following information:
1. Name of Project
2. Date Project Proposed
3. Date Project Approved
4. Date Project Started
5. Date Project Completed
6. Funding Source
7. Country
8. External funding? (Dollar amount)
Then measures at (1) project start (2) project completion (3) 3 years after completion (4) 5 years after completion and (5) 10 years after completion for the following development measures: GDP,GNP, Per Capita Income, Human Development Index, GINI, Freedom House, Literacy Rate, and Life expectancy.
Hopefully with this amount of data trends will start emerging. Educational funding should impact literacy rates, but will roads also help them? Time lagging and SPSS should be able to try to find some sort of relationship with the numbers. As mentioned in previous posts, there's been mixed evidence on the impacts of transportation infrastructure funding.
If there is some trends that come out of this, there may be an argument to do a similar study for some private sector firms to see the differences if they exist.
Tuesday, October 27, 2009
NEWS: Russia Looking at China?
An excerpt from the New York Times article below talks about how Russia is looking to China as a political and economic model. This really doesn't make much sense in terms of promoting economic growth because the two nations are drastically different in policy and historical experience. Russia is more politically open then China, but more corrupt. Economically, their investment and manufacturing are very different because of resources and education levels. On infrastructure policy alone, China never had much of a rail based system, whereas Russia used rail primarily for industrial purposes. Maybe for size and political party they are similar, but the communism in China was vastly different than the communism in Russia.
Russia and the CIS as a whole need to be looking west, not east. Here's part of the article:
"Whatever the motivation, Russia in recent years has started moving toward the Chinese model politically and economically. After the fall of the Soviet Union in 1991, Russia plunged into capitalism haphazardly, selling off many industries and loosening regulation. Under Mr. Putin, the government has reversed course, seizing more control over many sectors.
Today, both countries govern with a potent centralized authority, overseeing economies with a mix of private and state industries, although the Russians have long seemed less disciplined in doing so.
Corruption is worse in Russia than China, according to global indexes, and foreign companies generally consider Russia’s investment climate less hospitable as well, in part because of less respect for property rights.
Russia has also been unable to match China in modernizing roads, airports, power plants and other infrastructure. And Russia is grappling with myriad health and social problems that have reduced the average life expectancy for men to 60. One consequence is a demographic crisis that is expected to drag down growth."
Rest of the NYT Article
Russia and the CIS as a whole need to be looking west, not east. Here's part of the article:
"Whatever the motivation, Russia in recent years has started moving toward the Chinese model politically and economically. After the fall of the Soviet Union in 1991, Russia plunged into capitalism haphazardly, selling off many industries and loosening regulation. Under Mr. Putin, the government has reversed course, seizing more control over many sectors.
Today, both countries govern with a potent centralized authority, overseeing economies with a mix of private and state industries, although the Russians have long seemed less disciplined in doing so.
Corruption is worse in Russia than China, according to global indexes, and foreign companies generally consider Russia’s investment climate less hospitable as well, in part because of less respect for property rights.
Russia has also been unable to match China in modernizing roads, airports, power plants and other infrastructure. And Russia is grappling with myriad health and social problems that have reduced the average life expectancy for men to 60. One consequence is a demographic crisis that is expected to drag down growth."
Rest of the NYT Article
Sunday, October 25, 2009
Measuring the Impacts of Transportation Infrastructure
The accessibility issue that is brought up by Rietveld and Bruinsma is critical to the success of infrastructure projects as they relate to positive impact on GDP. Over the last decade the link between GDP and political and economic liberalization has been solidified with the examples of China and South Africa. Most of the relationship has to due to the mostly economic liberalization that is required in order to be a part of the global markets and to trade internationally due to the tariff-reducing policies of the World Trade Organization (WTO). In order to continue the World Bank’s promotion of economic and political policies that support open governments and economies, the issue of accessibility must be taken seriously for project planning. Although there is variation in how the level of accessibility is measured within the field, the success of most publicly funded projects depend on detailed feasibility and impact reports.
As part of a working paper, the IBRD released “The economic benefits of road transport projects” as a World Bank report in 1971.The paper provides a model that was used at the time within the Bank, and is still relevant today, as well as an analytical paradigm. Tak and Ray provide economic models for two basic situations and mathematical modules in which to measure the benefits of transit infrastructure in the absence of competing transport, and within the presence of competing transport. The authors also discuss supply and imperfect market conditions within their models. Although Tak and Ray attempt to provide a few models, which represent the social and economic benefit, “the practical difficulties of estimating benefits to normal and induced traffic arising from a road project are often great” (Tak and Ray 1971: 37). Both models show that there are some winners and losers when the roads are built, but that as a whole they allow for a more productive means of transportation, and that there is a chance for growth in GDP, although not a steadily increasing growth rate. The impacts of new transit infrastructure allow for the influx of capital in to areas that were not seen as more profitable investment due to constraints with the movement of goods, or because of the severe lack of sufficient infrastructure (roads, rail, connections) to support the new business venture, or to allow for any growth of an existing business. Although written in 1971, the model still has some practical applications and sets a baseline for how a younger World Bank felt about transport infrastructure projects.
Overall it is clear that the repair, expansion, and development of new transit infrastructure is necessary to facilitate growth and to provide opportunities for new and expanded business models. Although roads would be preferred in the case of the CIS due to the potential for the trucking industry, and as a step towards Westernization, an increase in any form of transit infrastructure, provided it was reasonable accessible would greatly assist the transition of states and would likely work to alleviate extreme poverty in other areas of the world.
As part of a working paper, the IBRD released “The economic benefits of road transport projects” as a World Bank report in 1971.The paper provides a model that was used at the time within the Bank, and is still relevant today, as well as an analytical paradigm. Tak and Ray provide economic models for two basic situations and mathematical modules in which to measure the benefits of transit infrastructure in the absence of competing transport, and within the presence of competing transport. The authors also discuss supply and imperfect market conditions within their models. Although Tak and Ray attempt to provide a few models, which represent the social and economic benefit, “the practical difficulties of estimating benefits to normal and induced traffic arising from a road project are often great” (Tak and Ray 1971: 37). Both models show that there are some winners and losers when the roads are built, but that as a whole they allow for a more productive means of transportation, and that there is a chance for growth in GDP, although not a steadily increasing growth rate. The impacts of new transit infrastructure allow for the influx of capital in to areas that were not seen as more profitable investment due to constraints with the movement of goods, or because of the severe lack of sufficient infrastructure (roads, rail, connections) to support the new business venture, or to allow for any growth of an existing business. Although written in 1971, the model still has some practical applications and sets a baseline for how a younger World Bank felt about transport infrastructure projects.
Overall it is clear that the repair, expansion, and development of new transit infrastructure is necessary to facilitate growth and to provide opportunities for new and expanded business models. Although roads would be preferred in the case of the CIS due to the potential for the trucking industry, and as a step towards Westernization, an increase in any form of transit infrastructure, provided it was reasonable accessible would greatly assist the transition of states and would likely work to alleviate extreme poverty in other areas of the world.
Saturday, October 24, 2009
News: World Bank Press Release on Economic Issues in Emerging Europe and Central Asia
Much in line with this morning's post, the World Bank issued a press release on October 3rd discussing some of the major economic issues going on in the CIS. Below is an except talking about what Bank funds are currently being used for:
The World Bank’s client countries in Emerging Europe and Central Asia are currently using Bank funds for 53 projects spanning institutional reform, infrastructure and interventions to help the neediest. Also, through the World Bank’s private sector arm, the International Finance Corporation (IFC), the Bank has teamed up with the EBRD and EIB on a $31 billion fund to support the banking sector and to fund lending to businesses hit by the global economic crisis through equity and debt finance, credit lines, and political risk insurance. And the Bank’s political risk insurance arm, MIGA, has made up to $3 billion available for investments in the heavily hit economies of the region. Guarantees worth nearly half of a $1 billion were issued in support of shareholder loans made by parent banks to their subsidiaries in Ukraine and Russia.
The full article is available here .
The World Bank’s client countries in Emerging Europe and Central Asia are currently using Bank funds for 53 projects spanning institutional reform, infrastructure and interventions to help the neediest. Also, through the World Bank’s private sector arm, the International Finance Corporation (IFC), the Bank has teamed up with the EBRD and EIB on a $31 billion fund to support the banking sector and to fund lending to businesses hit by the global economic crisis through equity and debt finance, credit lines, and political risk insurance. And the Bank’s political risk insurance arm, MIGA, has made up to $3 billion available for investments in the heavily hit economies of the region. Guarantees worth nearly half of a $1 billion were issued in support of shareholder loans made by parent banks to their subsidiaries in Ukraine and Russia.
The full article is available here .
News: Emergency loans to Belarus
More emergency funds make the IMF loan to Belarus total $2.23 Billion. This is almost purely economic stimulus money to keep things afloat, but I have to wonder if this money would be better used for other things. Either way $2.23 Billion is nothing to sneeze at. The impacts to funding infrastructure projects will likely be seen in a few years after all the economic issues level out, or get worse. Money is going into keeping the economy stable, but with no long term investments in public goods, there's going to be a severe lack of functional infrastructure whether it's education or roads:
“The International Monetary Fund (IMF) on Wednesday granted Belarus access to $700 million worth of emergency funds, bringing a crisis-easing loan package to $2.23 billion. The IMF executive board said Minsk's economic performance had warranted the disbursement of about $699.5 million, part of a $3.63 billion package….” [Agence France Presse/Factiva]
Reuters adds that “….IMF Deputy Managing Director Takatoshi Kato said the country had made ‘good progress’ in adjusting its policies to weather the global financial crisis…. ‘Exchange rate adjustment has helped reduce external vulnerabilities, with the present exchange regime providing a buffer against external shocks,’ Kato said. ‘The adjustment has been supported by a tight fiscal policy, with revenue shortfalls offset by spending cuts, and by an interest rate policy that has kept market rates high in real terms,’ he added….” [Reuters/Factiva]
Bloomberg writes that “…Belarus’ trade deficit widened more than 77 percent in the first half of the year to $3.95 billion from a $2.23 billion shortfall in the same period in 2008, according the National Statistics Committee. Exports to Russia, the country’s main trading partner, plummeted to $2.96 billion from $5.57 billion in the first six months of last year…. ‘Securing sufficient financial resources from the international community is essential for Belarus’ reform efforts,’ Kato said….” [Bloomberg]
“The International Monetary Fund (IMF) on Wednesday granted Belarus access to $700 million worth of emergency funds, bringing a crisis-easing loan package to $2.23 billion. The IMF executive board said Minsk's economic performance had warranted the disbursement of about $699.5 million, part of a $3.63 billion package….” [Agence France Presse/Factiva]
Reuters adds that “….IMF Deputy Managing Director Takatoshi Kato said the country had made ‘good progress’ in adjusting its policies to weather the global financial crisis…. ‘Exchange rate adjustment has helped reduce external vulnerabilities, with the present exchange regime providing a buffer against external shocks,’ Kato said. ‘The adjustment has been supported by a tight fiscal policy, with revenue shortfalls offset by spending cuts, and by an interest rate policy that has kept market rates high in real terms,’ he added….” [Reuters/Factiva]
Bloomberg writes that “…Belarus’ trade deficit widened more than 77 percent in the first half of the year to $3.95 billion from a $2.23 billion shortfall in the same period in 2008, according the National Statistics Committee. Exports to Russia, the country’s main trading partner, plummeted to $2.96 billion from $5.57 billion in the first six months of last year…. ‘Securing sufficient financial resources from the international community is essential for Belarus’ reform efforts,’ Kato said….” [Bloomberg]
Quick Lesson: Arguements Against Private Funding of Infrastructure
The argument against World Bank and IMF funding of infrastructure projects is the same argument Western governments face when building their own domestic infrastructure: private development is cheaper and quicker than government agencies. Although, as shown by Rietveld and Bruisman, infrastructure tends picked up by the private sector after the government has started it, especially in profitable ventures such as canals and rail. The problem with the reliance on private funding for infrastructure is that building roads and bridges to create linkages is expensive and the ability to create links that are useful and feasible is usually left to the discretion of the planning and transportation agencies of governments. In theory, however, private firms would seek to minimize the “costs of building or operating profitable infrastructure…whilst the return is maximized” (Graham 2000:192). The problem with such “profitable” infrastructure is that it usually includes passenger rail, toll bridges/roads and is concentrated in more urban and economically developed areas that can pay for the use of the services.
Although the idea of a more capitalist approach to infrastructure seems to be plausible in nations such as the United States which already have a solid system of roads and highways which are available free of charge for public use, and with some toll bridges/roads and passenger rail to provide more choice to citizens, the concept of relying fully on private funding of roads would not lead to wise planning decisions based on accessibility by the population but instead would fixate around capital flow and the most economically profitable venture. While infrastructure that provides revenue for government and companies is not necessarily a negative, the main issue with reliance is the lack of external considerations and good planning practices.
Although the idea of a more capitalist approach to infrastructure seems to be plausible in nations such as the United States which already have a solid system of roads and highways which are available free of charge for public use, and with some toll bridges/roads and passenger rail to provide more choice to citizens, the concept of relying fully on private funding of roads would not lead to wise planning decisions based on accessibility by the population but instead would fixate around capital flow and the most economically profitable venture. While infrastructure that provides revenue for government and companies is not necessarily a negative, the main issue with reliance is the lack of external considerations and good planning practices.
Friday, October 23, 2009
The World Bank funds many types of projects, especially after its expansion, which allowed The Bank to take a more comprehensive approach to development outside of physical infrastructure and economic restructuring. With strong roots based in economic development projects and basic infrastructure it could be easily assumed that World Bank projects tends to favor these types of projects. The table below provides a breakdown of the all the projects listed in the World Bank project database, available on their website.
* Project types are defined as follows:
1: Transportation Infrastructure (Roads, Rail, Maintenance)
2: Other Infrastructure (Electricity, Telecommunications, Oil, Gas)
3: Social Infrastructure (Education, Health, Judicial Reform, Land and Social Reform)
4: Economic (Development Projects, Agriculture Projects, Privatization Policies)
5: Other (Environmental Problems, Structural Readjustment Funding, Misc.)
What is clear from the World Bank data is that transportation infrastructure projects are typically under proposed in comparison to the other active and completed projects in the CIS. With only 5.6% of projects being in the transportation infrastructure column and 19.1% of projects being related to social infrastructure it is clear where the World Bank stands on project preferences. Although there is still a large support for economic and infrastructure projects when grouped together, transit infrastructure is clearly taking up a smaller portion of project budgets. While the financial obligation to transportation infrastructure projects could be assumed to be higher, many of the economic and social programs are equally costly and have less measurable success rates. The World Bank project database lists project dates back to the early 1990s and has many projects in the database that do not have an attached date. The table above is representative of all the projects that are recorded in the database, as well as the main funding mechanism as allocated by the World Bank. The difference between the IBRD and the IDA in terms of the types of projects they fund is hard to see, and the distinction is usually made by the GDP of the nations borrowing as opposed to the original purpose of the agencies.
Although all projects approved by the World Bank seem to have to fall under one of the eight United Nations Millennium Development Goals (UNMDG), the amount of environmental projects, specifically related to reintroducing or sustaining biodiversity seems an odd match for an organization trying to combat poverty and promote development first. A large majority of the category five projects full under forestry, biodiversity, or other environmental programs. If transportation is really as successful in creating new markets, lowering transaction costs, and creating development that will trickle-up into GDP, it is curious why more projects are not geared toward transportation infrastructure.
What is not taken into consideration in the World Bank project list is bilateral (government to government) loans and private investment. Although this type of funding is also critical to development it is outside the initial scope of this paper which is to provide some background on World Bank funding of the projects that it was originally mandated to do. Since the World Bank and IMF both tend to represent international sentiments of development and lending due to their large nation membership and weighted voting scheme, it could be assumed that the World Bank is more representative of the climate for international lending for governments and other international organizations.
* Project types are defined as follows:
1: Transportation Infrastructure (Roads, Rail, Maintenance)
2: Other Infrastructure (Electricity, Telecommunications, Oil, Gas)
3: Social Infrastructure (Education, Health, Judicial Reform, Land and Social Reform)
4: Economic (Development Projects, Agriculture Projects, Privatization Policies)
5: Other (Environmental Problems, Structural Readjustment Funding, Misc.)
What is clear from the World Bank data is that transportation infrastructure projects are typically under proposed in comparison to the other active and completed projects in the CIS. With only 5.6% of projects being in the transportation infrastructure column and 19.1% of projects being related to social infrastructure it is clear where the World Bank stands on project preferences. Although there is still a large support for economic and infrastructure projects when grouped together, transit infrastructure is clearly taking up a smaller portion of project budgets. While the financial obligation to transportation infrastructure projects could be assumed to be higher, many of the economic and social programs are equally costly and have less measurable success rates. The World Bank project database lists project dates back to the early 1990s and has many projects in the database that do not have an attached date. The table above is representative of all the projects that are recorded in the database, as well as the main funding mechanism as allocated by the World Bank. The difference between the IBRD and the IDA in terms of the types of projects they fund is hard to see, and the distinction is usually made by the GDP of the nations borrowing as opposed to the original purpose of the agencies.
Although all projects approved by the World Bank seem to have to fall under one of the eight United Nations Millennium Development Goals (UNMDG), the amount of environmental projects, specifically related to reintroducing or sustaining biodiversity seems an odd match for an organization trying to combat poverty and promote development first. A large majority of the category five projects full under forestry, biodiversity, or other environmental programs. If transportation is really as successful in creating new markets, lowering transaction costs, and creating development that will trickle-up into GDP, it is curious why more projects are not geared toward transportation infrastructure.
What is not taken into consideration in the World Bank project list is bilateral (government to government) loans and private investment. Although this type of funding is also critical to development it is outside the initial scope of this paper which is to provide some background on World Bank funding of the projects that it was originally mandated to do. Since the World Bank and IMF both tend to represent international sentiments of development and lending due to their large nation membership and weighted voting scheme, it could be assumed that the World Bank is more representative of the climate for international lending for governments and other international organizations.
News: Corruption in Russia, not really news
With the World Bank reform talks centering around the issues of corruption, this piece in the LA times about bribing traffic cops is relevant. If passengers are having these issues, it can only be imagined the problems commercial truckers and other road-based commercial transactions are having.
Article is by by Megan K. Stack and was originally published in August of this year.
"Before we start to look for trash in the eye of the traffic policeman, we should look into our own eyes," he says. "When I am asked, 'When will the corruption stop?' I always say that it will only stop when we stop paying bribes."
And, of course, he's right. But here's what I say, nevertheless: Pay the bribe! Because once I fumbled naively onto the path of the righteous and, my friends, it is a trail of sorrows.
If you pay the bribe, it may cost you $40, $60, maybe $100, plus 15 minutes and a few curses muttered under the breath.
If you don't pay the bribe, you have to go to traffic court. And it takes months to get a court date, and meanwhile you don't have a license, even if it's your American license.
And if you need to, for example, get that license back because you are leaving for a vacation in the United States and you want to drive while you're there, then you may (let's pretend this is hypothetical) have to hunt down the man in the bowels of the traffic bureaucracy who is powerful enough to get that license back. And that bribe will be plenty steep; lots more than you'd have paid on the side of the road. Hypothetically.
You travel to some sad sagging building where stray dogs howl at the doors and pay what you have to pay. At least that's over, you think."
Full Article is here
Article is by by Megan K. Stack and was originally published in August of this year.
"Before we start to look for trash in the eye of the traffic policeman, we should look into our own eyes," he says. "When I am asked, 'When will the corruption stop?' I always say that it will only stop when we stop paying bribes."
And, of course, he's right. But here's what I say, nevertheless: Pay the bribe! Because once I fumbled naively onto the path of the righteous and, my friends, it is a trail of sorrows.
If you pay the bribe, it may cost you $40, $60, maybe $100, plus 15 minutes and a few curses muttered under the breath.
If you don't pay the bribe, you have to go to traffic court. And it takes months to get a court date, and meanwhile you don't have a license, even if it's your American license.
And if you need to, for example, get that license back because you are leaving for a vacation in the United States and you want to drive while you're there, then you may (let's pretend this is hypothetical) have to hunt down the man in the bowels of the traffic bureaucracy who is powerful enough to get that license back. And that bribe will be plenty steep; lots more than you'd have paid on the side of the road. Hypothetically.
You travel to some sad sagging building where stray dogs howl at the doors and pay what you have to pay. At least that's over, you think."
Full Article is here
Projects: Armenia Road Rehabilitation
Looking back on the World Bank transportation infrastructure improvements for 2009, the most recently approved project is actually additional funding for the Armenia: Lifeline Roads Improvement Project which is funded out of the IRBD. $36.6 million USD with a standard 25 year loan (with a 10 year grace period) to rehab 140 km of roads in rural Armenia. Here's the reason for the additional funds (available in the project description):
This project paper concerns to provide an additional loan to the Republic of Armenia for the Lifeline Roads Improvement Project (LRIP). The additional loan will finance the scaling up of the project's activities through rehabilitating an additional 140 kilometers of the lifeline road network. This additional loan will also help mitigate the impact of the financial crisis by creating temporary jobs in road construction. This additional financing (AF) will also finance the design of project roads, supervision of works, capacity development in pavement design and road safety, project operating costs, and financial and technical audits. The project development objective (PDO) will remain the same as in the original project. The results framework and the monitoring indicators have been revised to reflect the increased scope of the project. The implementation arrangements remain the same as in the original project. There will be no co-financing from other donors. The closing date is being extended by one year, from December 31, 2010 to December 31, 2011.
The additional funds were approved of August of this year, but no new project proposals for transportation have happened in the second half of the year. Looks like the World Bank is setting the stage with government reform programs/money in Georgia and Armenia and adding additional funding to infrastructure projects in Azerbaijan. Hopefully a more exciting project will come out of the World Bank next year, otherwise it looks like private developers are having all the fun.
This project paper concerns to provide an additional loan to the Republic of Armenia for the Lifeline Roads Improvement Project (LRIP). The additional loan will finance the scaling up of the project's activities through rehabilitating an additional 140 kilometers of the lifeline road network. This additional loan will also help mitigate the impact of the financial crisis by creating temporary jobs in road construction. This additional financing (AF) will also finance the design of project roads, supervision of works, capacity development in pavement design and road safety, project operating costs, and financial and technical audits. The project development objective (PDO) will remain the same as in the original project. The results framework and the monitoring indicators have been revised to reflect the increased scope of the project. The implementation arrangements remain the same as in the original project. There will be no co-financing from other donors. The closing date is being extended by one year, from December 31, 2010 to December 31, 2011.
The additional funds were approved of August of this year, but no new project proposals for transportation have happened in the second half of the year. Looks like the World Bank is setting the stage with government reform programs/money in Georgia and Armenia and adding additional funding to infrastructure projects in Azerbaijan. Hopefully a more exciting project will come out of the World Bank next year, otherwise it looks like private developers are having all the fun.
Thursday, October 22, 2009
News: World Bank Reform
As of October 16th, the World Bank is discussing solutions to a lot of the general issues that are out there in the world. The most relevant thus far is the discussion on how to deal with corruption which can greatly impact what is actually spent on developing public goods. In many parts of the world, including Eastern Europe and Central Asia, bribes and favoritism are a way of life and a way of climbing the social ladder. Here is the overview, directly from their site:
The World Bank Group has been working on issues related to governance and anticorruption—in areas such as public sector performance, public financial management, civil service reform, decentralization, transparency and accountability—for more than a decade. Since 2007, the Bank’s new strategy, Strengthening World Bank Group Engagement on Governance and Anticorruption (GAC), is enabling a more systematic and central approach to making GAC an element of Bank operations across sectors and countries. Commitment and championship of this agenda emanates from the senior levels of the Bank’s management—including the president, managing directors, and the high-level GAC Council.
The strategy identifies governance and anticorruption issues as critical to improving development outcomes such as better delivery of services in health, education, roads, water, and electricity, better management of natural resource revenues, and more efficient investment in infrastructure. For instance: support for better and more transparent management of public finances narrows the scope for resource misallocations or leakages; assistance to strengthen local governments enables them to be more responsive to citizen needs; and support for oversight bodies and transparency mechanisms strengthens the accountability of public officials for delivery of services.
Source: World Bank
The World Bank Group has been working on issues related to governance and anticorruption—in areas such as public sector performance, public financial management, civil service reform, decentralization, transparency and accountability—for more than a decade. Since 2007, the Bank’s new strategy, Strengthening World Bank Group Engagement on Governance and Anticorruption (GAC), is enabling a more systematic and central approach to making GAC an element of Bank operations across sectors and countries. Commitment and championship of this agenda emanates from the senior levels of the Bank’s management—including the president, managing directors, and the high-level GAC Council.
The strategy identifies governance and anticorruption issues as critical to improving development outcomes such as better delivery of services in health, education, roads, water, and electricity, better management of natural resource revenues, and more efficient investment in infrastructure. For instance: support for better and more transparent management of public finances narrows the scope for resource misallocations or leakages; assistance to strengthen local governments enables them to be more responsive to citizen needs; and support for oversight bodies and transparency mechanisms strengthens the accountability of public officials for delivery of services.
Source: World Bank
Data on Current Transportation Infrastructure
* Includes water and land. (All provided data is from the CIA World Fact Book, 2009.)
The table above shows the difference that exists today within the CIS as related to the distribution of transportation infrastructure. Although the percentage of rail seems pretty consistent with the nations that also have natural gas and oil resources, the percentage of roads seems to have wider distribution, with the exception of Azerbaijan who has a historical oil industry. Russia’s low percentage of roads and rail is due to the vast majority of non-developable land and the break up of the USSR leading to much of the rail and industrialized cities being drawn into new boundaries for newly emerging CIS nations.
The percentage of the gross area of the countries covered by roads was higher than expected, but the actual effectiveness of these roads could be debatable depending on linkages, communities, and funding for maintenance. In order to determine the actual effectiveness of the road, in-depth case studies should be considered, comparing the population size in the rural and urban areas in comparison to the roads that service the areas and connect to social and economic necessities.
CIS: Transportation Infrastructure
Most of the transportation infrastructure in the region is rail oriented, with a large variation between Russia and the CIS. During the era of the Soviet Union, most of the rail lines were built for the transit of goods only and were found in the more urban areas. After the dissolution of the Soviet Union, many of the smaller states that were created did not have the appropriate infrastructure in order to sustain economic growth. Road density in the CIS states in 1993 was approximately 35 km/100,000 of the population, far below the European Union at 100 km/100,000 of the population. (Aghion and Shankerman1999) The main problem with this ratio in the CIS is that although rail can be an effective means of transportation for manufactured goods out of the country, the internal distribution of goods and citizens suffers. Even with the extensive rail networks that were built under the Soviet Union, passenger rail and the development of roads was neglected.
At the end of the Second World War, the International Road Transport Union (IRU) was created in 1948 as a way to “find solutions to the problems affecting road transport…[and] work with government bodies to develop unified and simplified rules governing road transport, customs, and road safety” (IRU 2002). Although the IRU was created to deal with the rules and regulations of trucking goods across borders, after the Cold War the IRU took an interest in the potential of road transport in the newly created CIS. In 1998, the IRU established a Permanent Delegation to the CIS in Moscow, which aimed at promoting “the development of North-South and East-West transport corridors within the territory of the CIS, as a major contribution to the economic development of the entire Eurasian region” (IRU 2002).
At the end of the Second World War, the International Road Transport Union (IRU) was created in 1948 as a way to “find solutions to the problems affecting road transport…[and] work with government bodies to develop unified and simplified rules governing road transport, customs, and road safety” (IRU 2002). Although the IRU was created to deal with the rules and regulations of trucking goods across borders, after the Cold War the IRU took an interest in the potential of road transport in the newly created CIS. In 1998, the IRU established a Permanent Delegation to the CIS in Moscow, which aimed at promoting “the development of North-South and East-West transport corridors within the territory of the CIS, as a major contribution to the economic development of the entire Eurasian region” (IRU 2002).
Raw Data for Macroeconomic Indicators
As part of my statistical model which will be discussed in the upcoming months, raw data is very important in measuring GDP/GNP and investments. This site is bare bones but put together by the Interstate Statistics Committee of the CIS:
CIS STATS
CIS STATS
News: NYT: Siemens Fills Russia's Need for High-Speed Train
Below is part of a NY Times Article by Andrew E. Kramer about the highspeed rail project in Russia. My main concern with this sort of project is that while passenger rail is great, it doesn't really do much for transporting goods which may not be the best way to foster development. Anyway to the article:
Siemens’s new train — the Sapsan, Russian for peregrine falcon — is a candidate for the high-speed link planned between San Francisco and Los Angeles that may open in 2020. Alstom, the maker of the French TGV trains, and Bombardier are also contenders. Japanese bullet train designs by Hitachi, which are lighter but less secure in a low-speed crash, the only type of collisions survivable, are another option.
The technological breakthrough of the Sapsan is that the train has no locomotive. Instead, electric motors are attached to wheels all along the train cars, as on some subway trains. (Passengers sit in the first car too.) Its top operating speed is 217 miles an hour, though in tests this model has reached 255 miles an hour, or about half the cruising speed of some jet airplanes.
In Russia, it took a decade of on-again, off-again talks before Siemens signed a deal with the state railways in 2006 amid a general thaw in relations between Germany and Russia.
Here as elsewhere, high-speed trains will compete with airlines. The 401-mile trip from downtown Moscow to downtown St. Petersburg will be 3 hours and 45 minutes. The average flying travel time is five hours, including the trips to and from the airport, check-in and security clearance.
The four-times-a-day service will trim 45 minutes from the fastest train service now. To achieve this, the Russian state railway spent $485 million upgrading the track and $926 million for eight Sapsan trains and a 30-year service agreement, at today’s exchange rates.
In other countries, high-speed trains have roundly beaten planes on price, overall travel time and convenience at ranges up to 600 miles between major cities. After high-speed trains between Paris and Lyons became well established, for example, commercial flights all but disappeared. And in the first year of operation, a Madrid-to-Barcelona high-speed link cut the air travel market about 50 percent.
Full Article Here
Siemens’s new train — the Sapsan, Russian for peregrine falcon — is a candidate for the high-speed link planned between San Francisco and Los Angeles that may open in 2020. Alstom, the maker of the French TGV trains, and Bombardier are also contenders. Japanese bullet train designs by Hitachi, which are lighter but less secure in a low-speed crash, the only type of collisions survivable, are another option.
The technological breakthrough of the Sapsan is that the train has no locomotive. Instead, electric motors are attached to wheels all along the train cars, as on some subway trains. (Passengers sit in the first car too.) Its top operating speed is 217 miles an hour, though in tests this model has reached 255 miles an hour, or about half the cruising speed of some jet airplanes.
In Russia, it took a decade of on-again, off-again talks before Siemens signed a deal with the state railways in 2006 amid a general thaw in relations between Germany and Russia.
Here as elsewhere, high-speed trains will compete with airlines. The 401-mile trip from downtown Moscow to downtown St. Petersburg will be 3 hours and 45 minutes. The average flying travel time is five hours, including the trips to and from the airport, check-in and security clearance.
The four-times-a-day service will trim 45 minutes from the fastest train service now. To achieve this, the Russian state railway spent $485 million upgrading the track and $926 million for eight Sapsan trains and a 30-year service agreement, at today’s exchange rates.
In other countries, high-speed trains have roundly beaten planes on price, overall travel time and convenience at ranges up to 600 miles between major cities. After high-speed trains between Paris and Lyons became well established, for example, commercial flights all but disappeared. And in the first year of operation, a Madrid-to-Barcelona high-speed link cut the air travel market about 50 percent.
Full Article Here
Post Cold War: World Bank and CIS
The creation of the Commonwealth of Independent States (CIS) on December 21, 1991, was tasked with the burden of carrying on the reforms started by Gorbachev under the SovietUnion. The political and social pressures that were facing these new states were also coupled with the economic disaster under transition governments and economies. In order to create stability in the region, “the task of restructuring and reconstructing Eastern Europe [after the collapse of the Soviet Union] was taken up by private investors, by Western governments (in bilateral-assistance projects and some debt relief), and through the European Bank for Reconstruction and Development (EBRD)” (Grieve 1992-1993). After the dissolution of the Soviet Union, the World Bank and the IMF also turned their interest to the newly forming states and the rest of the developing world. Many of the loans provided by the World Bank and IMF provided assistance for economic and political liberalization, and the funding of social and transportation infrastructure projects.
Specifically for transportation planning, the discussion after the collapse of the Soviet Union and the “profound changes in economic and spatial policy have brought about a re-orientation in transportation with a clear focus on supply-driven mechanisms, in which the crucial role of the public sector is increasingly no longer taken for granted” (Nijkamp et al 1995). Although the World Bank does not financially support infrastructure projects at the level it did during the 1950s and 60s, the fiscal allocation for transportation projects in 2007 was 20% of the budget, with an additional 12% marked for water, sanitation, and flood protection. Regionally, 15% of the funds went to Europe and Central Asia. (World Bank 2009: Our Focus) According to the project documents available on the World Bank website, all CIS nations are receiving or have recently received project financing for transportation projects including financing for a highway in Azerbaijan and infrastructure retrofitting in Belarus. The World Bank has also put more focus into obtaining the United Nation’s Millennium Development Goals, which calls for the elimination of extreme poverty by 2015 as well as universal education, lowering infant mortality rates, gender equality, maternal health, combating HIV/AIDS, environmental sustainability and forging global partnerships. (UN 2009: Millennium Goals) The World Bank works most closely with the first half of the goals, which are related to development and the availability of social services. The ability for citizens to reach schools and health clinics is paramount in order for the development goals of poverty reduction and health to be truly achieved with sustainable results.
Specifically for transportation planning, the discussion after the collapse of the Soviet Union and the “profound changes in economic and spatial policy have brought about a re-orientation in transportation with a clear focus on supply-driven mechanisms, in which the crucial role of the public sector is increasingly no longer taken for granted” (Nijkamp et al 1995). Although the World Bank does not financially support infrastructure projects at the level it did during the 1950s and 60s, the fiscal allocation for transportation projects in 2007 was 20% of the budget, with an additional 12% marked for water, sanitation, and flood protection. Regionally, 15% of the funds went to Europe and Central Asia. (World Bank 2009: Our Focus) According to the project documents available on the World Bank website, all CIS nations are receiving or have recently received project financing for transportation projects including financing for a highway in Azerbaijan and infrastructure retrofitting in Belarus. The World Bank has also put more focus into obtaining the United Nation’s Millennium Development Goals, which calls for the elimination of extreme poverty by 2015 as well as universal education, lowering infant mortality rates, gender equality, maternal health, combating HIV/AIDS, environmental sustainability and forging global partnerships. (UN 2009: Millennium Goals) The World Bank works most closely with the first half of the goals, which are related to development and the availability of social services. The ability for citizens to reach schools and health clinics is paramount in order for the development goals of poverty reduction and health to be truly achieved with sustainable results.
Wednesday, October 21, 2009
How Effective is Transportation Infrastructure? A Literature Review
Although few studies have been done on the impact of infrastructure development in transition economics and the Commonwealth of Independent States (CIS), many studies have been conducted to examine the cost-benefit relationships of building new roads, as well as the development of these networks within other transition economies. Studies have generally shown that there is a positive relationship between transit infrastructure and economic growth, as well as that infrastructure capital “increased industry and national productivity in the United States” (Aghion and Schankerman 1999: 82). The first of the studies being reviewed for the purposes of this paper is Philippe Aghion and Mark Schankerman’s article “Competition, entry and the social returns to infrastructure in transition economies”. The main argument of their study is that “the potential for developing competitive markets in transition economics has been inhibited by the inadequacy of both the institutional and physical infrastructure” (Aghion and Schankerman 1999). The authors continue to suggest that in order to assist success in transition economies that governments and multi-lateral aid agencies need to find a way to quantifiable measure the social returns from infrastructure projects and how these factors influence economic performance.
Although Aghion and Schankerman’s study also provides insight to the lack of development of government and telecommunications infrastructure in transition economies, their study centers on if and how transportation infrastructure helps promote market competition. Their paper finds that “indirect effects of infrastructure investment depend on features of the economic environment, including the number of firms in the market (initial density), the degree of cost asymmetry, the proportion of high cost firms, and the initial level of competition (or transaction costs)” (Aghion and Schankerman 1999: 98). Most of the demand for infrastructure, according to the authors, depends on the political economy, which has serious implications for the transition economies and governments of the CIS. If the political economy is one of the most important factors in the success of development from the building of infrastructure, than the historical evidence would seem to suggest that the more liberal the nation, the more successful transport infrastructure will be in facilitating economic and social growth.
Aghion and Schankerman’s model includes measures for government and telecommunications infrastructure as well as transportation. Overall their study shows that there is a relationship between developing infrastructure and economic growth and political liberalization. What is unclear is the distribution of winners and losers that the authors reference in terms of low-cost and high-cost firms. The authors also suggest that the research they created should be followed with a more in-depth analysis of political economy and how that essentially impacts the effectiveness of infrastructure in economic development.
Feinberg and Meurs’s paper “Market Report, Infrastructure and Exchange Rate Passthrough in Central and Eastern Europe” provides an alternative to Aghion and Schankerman’s argument that “physical infrastructure is crucial for competitive market development” (Feinger and Meurs 2005: 23). Feinber and Meurs found the infrastructure in Central and Eastern Europe (CEE) inferior to the needs of the nations. They also point out that the World Bank and other international agencies have made infrastructure development a priority for project lending, but that the economic failures of the states that received many of these loans left the infrastructure in disrepair or insufficient for growth. (Feinberg and Meurs 2005)
In this study, Feinberg and Meurs analyze “13 broad industry sectors for the years 1991-200 for Bulgaria, Hungary, Poland, Romania, and Slovenia with data…and (6) an index (constructed by the authors) of physical infrastructure in the five countries” (Feingber and Meurs 2005: 24). The results of the paper finds the impacts of physical infrastructure unclear but that “market reforms (improving the legal/institutional infrastructure) in Central and Eastern Europe have had the desired effect of increasing the integration of these countries’ economies into the global economic system, with gains in the competitiveness of domestic markets” (Feinberg and Meurs 2005: 29). Although the relationship between economic growth and the development of physical infrastructure was unclear, the data does suggest that the improvement of physical infrastructure may increase economic growth and capital movement. The authors of the study expected a stronger impact from infrastructure on economic development than what was shown in their results. Although the nation data used in the Feinberg and Meurs study does not include any member of the CIS, the shared history and economic performance of Central and Eastern Europe and the CIS is reasonable. Both studies discussed thus far have found some relationship between infrastructure and economic development. What is interesting is that both authors also account for other types of infrastructure, specifically in terms of government and social programs.
The final component to the literature review is a book by Rietveld and Bruinsma, Is Transport Infrastructure Effective?. The authors take a more economic and urban planning approach to the question, whereas the previous two articles were predominantly social science and economics oriented. Rietveld and Bruinsma discuss infrastructure as it relates to public funding and the impact of it on the delivery of social and economic goods. The financing of infrastructure, according to the authors tends to alternate between public and private financing, depending on the policies in vogue at the time. Overall, however, there has been a decline of funding from the public sector in the last twenty years, the authors cite many causes that may have influenced government spending, specifically the “changing opions about the role of the state in the economy and the society as a whole” in the 1980s (Rietvel and Bruinsma 1998). The authors also suggest the approach taken by Grubler and Nakiconovic in 1991, who found that there was a life-cycle to the funding of infrastructure by the public sector, in which the overlap became increasing smaller between the two. The cycles would include the canal cycle in the beginning of the 19th century, the railway cycle in the first half of the 19th century, the 20th century cycle of road and the current or to be occurring cycle of aviation and telecommunications. (Rietveld and Bruinsma) Although public funding for infrastructure types has seemed to pull away, a simple explanation seems to be that the initial costs and energy required to initially plan, develop, and build the infrastructure are highest and the residual maintenance of these projects makes the state seem less involved in infrastructure as a whole. In some cases, such as in Russia after the dissolution of the Soviet Union, the privatization of rail has also shifted the need for public capital for maintenance into private companies who run freight and passenger rail.
Rietveld and Bruinsma also discuss the issue of accessibility, specifically the ease of use, and the effectiveness of infrastructure. The authors do a fair job compiling other studies that have operationalized these concepts and proceed into a discussion of calculating transport costs. They argue, much like the previous two articles, “transport infrastructure investment lead to changes in generalized transport costs via shorter distances or higher speeds, which give rise to reductions in fuel, capital and labour costs” (Rietveld and Bruinsma 1998: 47). This decrease in transportation costs would, in theory, increase productivity, which will in turn lead to growth of gross domestic product (GDP). Development of infrastructure, specifically accessible and well-planned infrastructure can also positively impact property value, which is also a facilitator of investment and growth in developing and developed nations. For Rietveld and Bruinsma the “inequalities in accessibility are least pronounced in the road network…[however] in the rail network inequalities are clearly higher” (Reitveld and Bruinsma 1998: 139). The better accessibility for road networks are partially due to the actual cost of roads versus rail and also due to the ease of expanding and adding onto existing road networks, whereas expansion and changes in rail and create more problems and cost more. Also roads are more likely to be used for both economic and personal travel, whereas the differences between passenger and industrial rail are more challenging due to the different gauges in rail lines, locomotives, and the planning process differences between industrial and passenger rail.
While plans for roads that serve industrial and residential areas might differ in the amount of capacity and how the network as a whole will react to the new road or linkage, traffic planning models are widely used internationally by Western governments to determine how many lanes are necessary and where connections should be made based on user demand. Rail is harder to determine demand since passenger rail and industrial rail require specialized trains that are able to adapt to the different types of lines, and set schedules are not always able to meet demand, and sometimes can actually run at a higher cost since a train without product or passengers following the schedule might be necessary in order to make the next connection. The remainder of the book delves into comparisons of European accessibility studies, corridor development, and some case studies. With the varying opinions on how to determine and measure accessibility, the author’s comparison is useful and shows that for a most part population, type of transit infrastructure, and usage rates are standard in determining this factor. As a whole, the authors are advocating for the building of road networks, and they show a compelling link between positive influx of GDP due to the development of infrastructure.
Although Aghion and Schankerman’s study also provides insight to the lack of development of government and telecommunications infrastructure in transition economies, their study centers on if and how transportation infrastructure helps promote market competition. Their paper finds that “indirect effects of infrastructure investment depend on features of the economic environment, including the number of firms in the market (initial density), the degree of cost asymmetry, the proportion of high cost firms, and the initial level of competition (or transaction costs)” (Aghion and Schankerman 1999: 98). Most of the demand for infrastructure, according to the authors, depends on the political economy, which has serious implications for the transition economies and governments of the CIS. If the political economy is one of the most important factors in the success of development from the building of infrastructure, than the historical evidence would seem to suggest that the more liberal the nation, the more successful transport infrastructure will be in facilitating economic and social growth.
Aghion and Schankerman’s model includes measures for government and telecommunications infrastructure as well as transportation. Overall their study shows that there is a relationship between developing infrastructure and economic growth and political liberalization. What is unclear is the distribution of winners and losers that the authors reference in terms of low-cost and high-cost firms. The authors also suggest that the research they created should be followed with a more in-depth analysis of political economy and how that essentially impacts the effectiveness of infrastructure in economic development.
Feinberg and Meurs’s paper “Market Report, Infrastructure and Exchange Rate Passthrough in Central and Eastern Europe” provides an alternative to Aghion and Schankerman’s argument that “physical infrastructure is crucial for competitive market development” (Feinger and Meurs 2005: 23). Feinber and Meurs found the infrastructure in Central and Eastern Europe (CEE) inferior to the needs of the nations. They also point out that the World Bank and other international agencies have made infrastructure development a priority for project lending, but that the economic failures of the states that received many of these loans left the infrastructure in disrepair or insufficient for growth. (Feinberg and Meurs 2005)
In this study, Feinberg and Meurs analyze “13 broad industry sectors for the years 1991-200 for Bulgaria, Hungary, Poland, Romania, and Slovenia with data…and (6) an index (constructed by the authors) of physical infrastructure in the five countries” (Feingber and Meurs 2005: 24). The results of the paper finds the impacts of physical infrastructure unclear but that “market reforms (improving the legal/institutional infrastructure) in Central and Eastern Europe have had the desired effect of increasing the integration of these countries’ economies into the global economic system, with gains in the competitiveness of domestic markets” (Feinberg and Meurs 2005: 29). Although the relationship between economic growth and the development of physical infrastructure was unclear, the data does suggest that the improvement of physical infrastructure may increase economic growth and capital movement. The authors of the study expected a stronger impact from infrastructure on economic development than what was shown in their results. Although the nation data used in the Feinberg and Meurs study does not include any member of the CIS, the shared history and economic performance of Central and Eastern Europe and the CIS is reasonable. Both studies discussed thus far have found some relationship between infrastructure and economic development. What is interesting is that both authors also account for other types of infrastructure, specifically in terms of government and social programs.
The final component to the literature review is a book by Rietveld and Bruinsma, Is Transport Infrastructure Effective?. The authors take a more economic and urban planning approach to the question, whereas the previous two articles were predominantly social science and economics oriented. Rietveld and Bruinsma discuss infrastructure as it relates to public funding and the impact of it on the delivery of social and economic goods. The financing of infrastructure, according to the authors tends to alternate between public and private financing, depending on the policies in vogue at the time. Overall, however, there has been a decline of funding from the public sector in the last twenty years, the authors cite many causes that may have influenced government spending, specifically the “changing opions about the role of the state in the economy and the society as a whole” in the 1980s (Rietvel and Bruinsma 1998). The authors also suggest the approach taken by Grubler and Nakiconovic in 1991, who found that there was a life-cycle to the funding of infrastructure by the public sector, in which the overlap became increasing smaller between the two. The cycles would include the canal cycle in the beginning of the 19th century, the railway cycle in the first half of the 19th century, the 20th century cycle of road and the current or to be occurring cycle of aviation and telecommunications. (Rietveld and Bruinsma) Although public funding for infrastructure types has seemed to pull away, a simple explanation seems to be that the initial costs and energy required to initially plan, develop, and build the infrastructure are highest and the residual maintenance of these projects makes the state seem less involved in infrastructure as a whole. In some cases, such as in Russia after the dissolution of the Soviet Union, the privatization of rail has also shifted the need for public capital for maintenance into private companies who run freight and passenger rail.
Rietveld and Bruinsma also discuss the issue of accessibility, specifically the ease of use, and the effectiveness of infrastructure. The authors do a fair job compiling other studies that have operationalized these concepts and proceed into a discussion of calculating transport costs. They argue, much like the previous two articles, “transport infrastructure investment lead to changes in generalized transport costs via shorter distances or higher speeds, which give rise to reductions in fuel, capital and labour costs” (Rietveld and Bruinsma 1998: 47). This decrease in transportation costs would, in theory, increase productivity, which will in turn lead to growth of gross domestic product (GDP). Development of infrastructure, specifically accessible and well-planned infrastructure can also positively impact property value, which is also a facilitator of investment and growth in developing and developed nations. For Rietveld and Bruinsma the “inequalities in accessibility are least pronounced in the road network…[however] in the rail network inequalities are clearly higher” (Reitveld and Bruinsma 1998: 139). The better accessibility for road networks are partially due to the actual cost of roads versus rail and also due to the ease of expanding and adding onto existing road networks, whereas expansion and changes in rail and create more problems and cost more. Also roads are more likely to be used for both economic and personal travel, whereas the differences between passenger and industrial rail are more challenging due to the different gauges in rail lines, locomotives, and the planning process differences between industrial and passenger rail.
While plans for roads that serve industrial and residential areas might differ in the amount of capacity and how the network as a whole will react to the new road or linkage, traffic planning models are widely used internationally by Western governments to determine how many lanes are necessary and where connections should be made based on user demand. Rail is harder to determine demand since passenger rail and industrial rail require specialized trains that are able to adapt to the different types of lines, and set schedules are not always able to meet demand, and sometimes can actually run at a higher cost since a train without product or passengers following the schedule might be necessary in order to make the next connection. The remainder of the book delves into comparisons of European accessibility studies, corridor development, and some case studies. With the varying opinions on how to determine and measure accessibility, the author’s comparison is useful and shows that for a most part population, type of transit infrastructure, and usage rates are standard in determining this factor. As a whole, the authors are advocating for the building of road networks, and they show a compelling link between positive influx of GDP due to the development of infrastructure.
Transportation Infrastrucre in the Soviet Union : a quick lesson.
Transportation infrastructure, for the purposes of this paper is going to be limited to roads and industrial rail for freight and passenger services. Throughout the Cold War, the Soviet Union set the model for infrastructure development in centrally planned economies with the “neglect of transport costs in location decisions [and] very intensive use of rail and freight services” (Aghion and Schankerman 1999). Although there was some development of passenger rail and personal transportation, centrally planned government tended to focus freight rail in order to transport manufactured goods to market. The general market benefits of building infrastructure are wide spread, and involve lowering the cost of the transportation of goods, while also providing incentives for new firms to enter into the market. (Aghion and Schankerman 1999)
A good majority of the development of Soviet rail lines and transportation were outlined prior to the advent of the Second World War and were expressed in the various “Five Year Plans” that were developed until the collapse of the Soviet Union in 1991. As a whole, “except for the old historical centers, almost all of Russian urban growth has taken place during the socialist era…[and] the fact that urban development took place in a period when land was nationalized and administratively allocated…has had a very profound impact on the internal organization of Russian cities” (Bertaud and Renaud 1994). Land allocation in a nation without free markets led to an overdevelopment of industry and rail lines that would likely not have naturally occurred. By 1993, the former territory of the Soviet Union had approximately 140km/100,000 of the population for rail density and only approximately 85 km/100,000 of population of road density. Although the density of roads was comparable to the European Union (EU) in 1993 which had approximately 100 km/100,000 of population the density of rail between the show an even larger disparity with the EU having only 50 km/100,000 of population. (Aghion and Schankerman 1999) Although the Soviet Union had developed a significant amount of rail, most of those lines remained within the borders of the newly formed Russia, leaving only about 35 km/100,000 of population in the remaining CIS states with Russia having just over 100 km/100,000 of population for rail density.
The under-development of road transportation was intended under the central planning of the Soviet Union. (IRU, 2002) For the Soviet Union the emphasis on rail was due to the association with industry and strength, as well as created a steel industry for creating the rails and equipment. The legacy of rail in the Soviet Union left a solid network of freight rail, with no real passenger rail or road alternative to travel. Although the rails were useful for the initial industrial development of the nations, unlike most other states, the Soviet Union did not turn to the development of roads or truck-based transit of goods.
A good majority of the development of Soviet rail lines and transportation were outlined prior to the advent of the Second World War and were expressed in the various “Five Year Plans” that were developed until the collapse of the Soviet Union in 1991. As a whole, “except for the old historical centers, almost all of Russian urban growth has taken place during the socialist era…[and] the fact that urban development took place in a period when land was nationalized and administratively allocated…has had a very profound impact on the internal organization of Russian cities” (Bertaud and Renaud 1994). Land allocation in a nation without free markets led to an overdevelopment of industry and rail lines that would likely not have naturally occurred. By 1993, the former territory of the Soviet Union had approximately 140km/100,000 of the population for rail density and only approximately 85 km/100,000 of population of road density. Although the density of roads was comparable to the European Union (EU) in 1993 which had approximately 100 km/100,000 of population the density of rail between the show an even larger disparity with the EU having only 50 km/100,000 of population. (Aghion and Schankerman 1999) Although the Soviet Union had developed a significant amount of rail, most of those lines remained within the borders of the newly formed Russia, leaving only about 35 km/100,000 of population in the remaining CIS states with Russia having just over 100 km/100,000 of population for rail density.
The under-development of road transportation was intended under the central planning of the Soviet Union. (IRU, 2002) For the Soviet Union the emphasis on rail was due to the association with industry and strength, as well as created a steel industry for creating the rails and equipment. The legacy of rail in the Soviet Union left a solid network of freight rail, with no real passenger rail or road alternative to travel. Although the rails were useful for the initial industrial development of the nations, unlike most other states, the Soviet Union did not turn to the development of roads or truck-based transit of goods.
Tuesday, October 20, 2009
Topic Introduction
In the wake of the Second World War many of the Eastern European nations were devastated by the bombing and occupation that occurred during the war years. Prior to the end of the war, the Allied powers sought to create peace in the international community and started talks for the recreation of a stronger, more widespread League of Nations. The creation of the United Nations also resulted in the creation of the International Monetary Fund (IMF) and World Bank, both of which have a significant amount of autonomy from the United Nations, and deal with financing, lending, and development. While the understanding of the IMF and World Bank today are more in line with poverty reduction, the initial creation of the institutions were due to the “two serious problems [facing] policymakers in the last stages of the Second World War. First, Europe had been devastated by war and needed to be reconstructed. Second, the ‘beggar thy neighbor’ economic policies of the interwar years had led to disastrous outcomes” (Woods, 1996). Although the second problem was mostly contained within developing nations, the failure of economic policies left a void for loans and guidance that needed to be filled in order to avoid a larger collapse of civil society. It was under these circumstances that the first economically focused international organizations of the IMF and World Bank came into existence.
The focus of the World Bank on reconstruction of industrialized nations shaped how the World Bank went about loaning money: with definite projects in mind. Most of the original World Bank assistance was in rebuilding infrastructure such as roads, railway, bridges, and public utilities. During the first decade, approximately three-quarters of the funds were spent on public utilities (Lewis and Kapur 1973). Although the original intention of the World Bank was funding for a project-approach to lending and the reconstruction of war torn Europe, the introduction of the Marshall Plan in 1947, quickly changed the role of the World Bank, resulting in a “loan portfolio dominated by power and transportation projects, which came to account for 78 percent of lending to poorer countries by the end of the 1950s” (Woods, 2006). This shift from redevelopment of industrialized nations to assisting developing nations with the industrialization process occurred at the end of the 1940’s with the implementations of the Marshall Plan and the Anglo-American Loan Agreement in Western Europe. This change of view and location did not influences the internal structure and regulations of the World Bank, and thus the types of projects it funded did not change drastically until later in the century, ensuring that its loans to the borrowing parties had conditions to ensure development programs and public overhead capital.
Institutionally the World Bank also encompasses two other organizations, the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA). While the IDA focuses its loans and assistance on reducing poverty the poorest nations, the IBRD “aims to reduce poverty in middle-income and creditworthy poorer countries by promoting sustainable development through loans, guarantees, risk management products, and analytical and advisory service” (World Bank 2009: IRBD). While both the IDA and IRBD provide development assistance, the IDA tends to promote smaller scale, social development programs whereas the IRBD tends to do more project assistance for nations. World Bank funding for social programs is about 41% of the total budget, with the breakdown as follows: 8% for education, 11% health and other social services, and 22% to law and justice, and public administration. (World Bank 2009: Our Focus)
The focus of the World Bank on reconstruction of industrialized nations shaped how the World Bank went about loaning money: with definite projects in mind. Most of the original World Bank assistance was in rebuilding infrastructure such as roads, railway, bridges, and public utilities. During the first decade, approximately three-quarters of the funds were spent on public utilities (Lewis and Kapur 1973). Although the original intention of the World Bank was funding for a project-approach to lending and the reconstruction of war torn Europe, the introduction of the Marshall Plan in 1947, quickly changed the role of the World Bank, resulting in a “loan portfolio dominated by power and transportation projects, which came to account for 78 percent of lending to poorer countries by the end of the 1950s” (Woods, 2006). This shift from redevelopment of industrialized nations to assisting developing nations with the industrialization process occurred at the end of the 1940’s with the implementations of the Marshall Plan and the Anglo-American Loan Agreement in Western Europe. This change of view and location did not influences the internal structure and regulations of the World Bank, and thus the types of projects it funded did not change drastically until later in the century, ensuring that its loans to the borrowing parties had conditions to ensure development programs and public overhead capital.
Institutionally the World Bank also encompasses two other organizations, the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA). While the IDA focuses its loans and assistance on reducing poverty the poorest nations, the IBRD “aims to reduce poverty in middle-income and creditworthy poorer countries by promoting sustainable development through loans, guarantees, risk management products, and analytical and advisory service” (World Bank 2009: IRBD). While both the IDA and IRBD provide development assistance, the IDA tends to promote smaller scale, social development programs whereas the IRBD tends to do more project assistance for nations. World Bank funding for social programs is about 41% of the total budget, with the breakdown as follows: 8% for education, 11% health and other social services, and 22% to law and justice, and public administration. (World Bank 2009: Our Focus)
Tuesday, October 06, 2009
New Title, Old Blog
This blog is being redone as thesis reasearch and a way to keep me accountable to posting here and continuing reseraching on my end. The premise of the thesis is this:
Increased spending into transportation infrastructure (specifically roads) will have a more immediate GDP impact, which will also positively impact per capita income and will in turn lead to higher standards of living and more democratic states.
A fair amount of research has been done by the people over at freedomhouse.org and within other political journals that per capital income above $10,000/year greatly increases democratic practices. I'm a little more interested on the human development side of things, but democratic states also tend to have better human rights and resources.
There has not been a lot of research on this topic, but there is a literature review for this thesis. It will be posted in the coming days.
Enjoy, and happy discussions.
Increased spending into transportation infrastructure (specifically roads) will have a more immediate GDP impact, which will also positively impact per capita income and will in turn lead to higher standards of living and more democratic states.
A fair amount of research has been done by the people over at freedomhouse.org and within other political journals that per capital income above $10,000/year greatly increases democratic practices. I'm a little more interested on the human development side of things, but democratic states also tend to have better human rights and resources.
There has not been a lot of research on this topic, but there is a literature review for this thesis. It will be posted in the coming days.
Enjoy, and happy discussions.
Thursday, October 01, 2009
References Listed
Aghion, Philippe and Mark Schankerman. (1999) “Competition, Entry and the Social Returns to Infrastructure in Transition Economies”. Econimics of Transition. Vol. 7 (1) 1999, 70-101.
Ayittey, George B.N. (2006), Africa Unchained: The Blueprint for Africa's Future, New
York: Palgrave Macmillan
Bertaud, Alain and Bertrand Renaud. (1994). “Cities Without Land Markets: Lessons of the Failed Socialist Experiment”. World Bank Discussion Papers. Washington DC.
“CIA- World Fact Book”. (2009) < https://www.cia.gov/library/publications/the-world-
factbook/index.html>.
Feinberg, Robert M. and Mieke Meurs. (2005) “Market Reform, Infrastructure and Exchange Rate Passthrough in Central and Eastern Europe”. Post-Communist Economies, Vol. 17, No.1, March 2005.
Graham, Stephen. (2000) “Constructing Premium Network Spaces: Reflections on Infrastructure Networks and Contemporary Urban Development”. International Journal of Urban and Regional Research. Vol. 24.1, March 2000.
Greive, Malcolm J (1992-1993). “International Assistance and Democracy: Assessing Efforts to Assist Post-Communist Development”. Studies in Comparative International Development, Winter 1992-1993, Vol. 27, No. 4, 80-101.
IRU (2001). Competition in East-West Road Transport Markets: Providing Opportunities for All.
IRU (2003). Road Transport in Russia 2002-2003. International Road Transport Union.
Lewis, John P. and Ishan Kapur (1973). The World Bank Group, Multilateral Aid, and the 1970s.
Nijkamp, Peter and Sytze A. Reinstra (1995). “Private Sector Involvement in Financing and Operating Transport Infrastructure”. The Annals of Regional Science. Vol 29: 221-235.
“Rail and Trade Transport Facilitation” Report No. AB3387. World Bank, Project Papers. (2009). < http://web.worldbank.org/external/projects/>
Rietveld, Piet and Frank Bruinsma. (1998) Is Transport Infrastructure Effective? Springer.
“South-West Roads: Western Europe-Western China International Transit Corridor”. Project No. P099270. World Bank Project Database (2009).
Tak, Herman G. Van and Anadarup Ray (1971). “The Economic Benefits of Road Transport Projects”. World Bank Staff Occasional Papers. IBRD, 1971.
“The World Bank, Mapped” (2009). < http://geo.worldbank.org/>
Woods, Ngaire (2006). The Globalizers: The IMF, the World Bank, and Their Borrowers. Cornell University Press. “World Bank: Project Database” (2009).
Ayittey, George B.N. (2006), Africa Unchained: The Blueprint for Africa's Future, New
York: Palgrave Macmillan
Bertaud, Alain and Bertrand Renaud. (1994). “Cities Without Land Markets: Lessons of the Failed Socialist Experiment”. World Bank Discussion Papers. Washington DC.
“CIA- World Fact Book”. (2009) < https://www.cia.gov/library/publications/the-world-
factbook/index.html>.
Feinberg, Robert M. and Mieke Meurs. (2005) “Market Reform, Infrastructure and Exchange Rate Passthrough in Central and Eastern Europe”. Post-Communist Economies, Vol. 17, No.1, March 2005.
Graham, Stephen. (2000) “Constructing Premium Network Spaces: Reflections on Infrastructure Networks and Contemporary Urban Development”. International Journal of Urban and Regional Research. Vol. 24.1, March 2000.
Greive, Malcolm J (1992-1993). “International Assistance and Democracy: Assessing Efforts to Assist Post-Communist Development”. Studies in Comparative International Development, Winter 1992-1993, Vol. 27, No. 4, 80-101.
IRU (2001). Competition in East-West Road Transport Markets: Providing Opportunities for All.
IRU (2003). Road Transport in Russia 2002-2003. International Road Transport Union.
Lewis, John P. and Ishan Kapur (1973). The World Bank Group, Multilateral Aid, and the 1970s.
Nijkamp, Peter and Sytze A. Reinstra (1995). “Private Sector Involvement in Financing and Operating Transport Infrastructure”. The Annals of Regional Science. Vol 29: 221-235.
“Rail and Trade Transport Facilitation” Report No. AB3387. World Bank, Project Papers. (2009). < http://web.worldbank.org/external/projects/>
Rietveld, Piet and Frank Bruinsma. (1998) Is Transport Infrastructure Effective? Springer.
“South-West Roads: Western Europe-Western China International Transit Corridor”. Project No. P099270. World Bank Project Database (2009).
Tak, Herman G. Van and Anadarup Ray (1971). “The Economic Benefits of Road Transport Projects”. World Bank Staff Occasional Papers. IBRD, 1971.
“The World Bank, Mapped” (2009). < http://geo.worldbank.org/>
Woods, Ngaire (2006). The Globalizers: The IMF, the World Bank, and Their Borrowers. Cornell University Press. “World Bank: Project Database” (2009).
