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Cover -- Contents -- I. BACKGROUND -- II. PUBLIC INVESTMENT IN BOLIVIA -- III. THE MODEL -- A. Different Public Investment Path Assumptions & -- Hydrocarbon Revenue Projections -- B. Assumptions and Model Calibration -- IV. SIMULATION RESULTS AND DISCUSSION -- A. Baseline Scenario -- B. More Favorable Scenario -- V. SENSITIVITY ANALYSES -- A. Endogenously Adjusting Indirect Taxes -- B. Natural Gas Discoveries Tied to Public Investment -- VI. CONCLUSION AND POLICY IMPLICATIONS -- Figures -- 1. Investment and Capital Stock -- 2. Public Investment and Capital Stock -- 3. Proven Natural Gas Reserves -- 4. Baseline Scenario -- 5. Favorable Scenario -- 6. Fiscal Gaps Covered by Indirect Tax Adjustment -- 7. Natural Gas Discovery is Tied to Public Investment -- Annexes -- I. The Efficiency of Public Investment in Bolivia -- II. Key Features of the DIG Model -- III. Model Calibration -- IV. Additional Sensitivity Analyses.

Prior to 1930 discussion of public investment was conducted largely on the basis of an assumption of full employment within a closed economy. Consequently it centred around the productiveness of public investment as opposed to that undertaken in the privately-operated sector of the economy, the appropriate methods of financing the projects undertaken, and the legitimate spheres of operation of public bodies. The usefulness of public investment projects was believed, in the main, to be confined to their long term contribution to the productiveness of the economy. In practice, even well into the nineteen-thirties, governments, with exceptions, undertook public projects when finances were buoyant and borrowing relatively easy, and curtailed them, in attempts to balance budgets, when depression became serious.After 1930 both in the thought and practices of some central governments and in economic writing the pendulum swung the other way. Main emphasis was laid on the current employment and income giving effects of public investment. This change in emphasis received additional impetus after the advent of The General Theory of Employment, Interest and Money when economic discussion became much more concerned with the level of employment than the distribution of the factors of production among alternative uses.The transfer of attention from the long term aspects of public projects to their effect on current employment and income maintenance was accompanied by the shortcomings of practice and thought which are inevitable in an undeveloped field. While a good deal was written and spoken about the desirability of well thought out and well planned investment, insufficient attention was given to its attainment and in practice resort was had to many undertakings whose value, from either a short or long term viewpoint, was dubious. The shortcomings were largely associated with failure to cope adequately with the institutional and administrative problem involved. Further, there was a penchant for fastening on single devices to meet the overall employment problem.

This document addresses the Zambian Government's strategy for expenditure restructuring and specifies the priority public investment programme for the Policy Framework Paper period, i.e. 1990-1993

The consumption equivalence method is the theoretical basis of public cost-benefit analysis. Consumption equivalence public capital prices are explicitly introduces in order to sufficiently care for the opportunity cost of public expenditure. This can solve the dispute about the social rate of discount within public cost-benefit analysis witch was generated on a criterion looking similar to the capital value formula, known as Lind's approach. The social rate of discount is liberated from opportunity costs considerations and the discounting away of the effects for future welfare vanishes. The corresponding question whether one should accept a positive value of the pure rate of social time preference is an old issue. Its current state between the prescriptive and descriptive view can also be interpreted as a consequence of the oversimplification of standard cost– benefit analysis. But apart from an economic self-process the pure rate of social time preference is also defined as a business-as-usual value of social distance discounting. Hence, a political choice has to be made about this rate which is free in principal.

The Colombian Government has made significant progress in the implementation of effective processes, practices, and methodologies for public investment management (PIM). A 2011 IMF-published report ranked Colombia among the top 5 countries with best PIM practices out of a sample of 71 low- and middle-income countries (Dabla-Norris and others, 2011). The report assessed the following 4 key features: (a) strategic guidance and project review, (b) project selection and budgeting, (c) project implementation, and (d) project evaluation and auditing. Colombia was deemed to have achieved a good performance on 3 out of the 4 key features. Nevertheless, the country's PIM system still faces the need for areas of improvement identified by the World Bank's PIM framework. This framework allows for identification of not only the presence of must-have features in PIM systems that are key to promoting effective and efficient public investment but also if those features are implemented in the field and if they have achieved their intended purpose. In the case of Colombia, the main challenges identified were related to the broad implementation of tools designed, particularly for management of public investment projects as well as with the fractioning of standards and practices, and the overemphasis placed on formal controls during the formulation and project implementation stages. In addition, the country PIM processes had weaknesses in terms of the review and ex post project evaluation. This document summarizes the main findings of a PIM study carried out in Colombia in 2015. The document includes an analytical framework for assessing public investment management and presents the assessment results as well as improvement recommendations to strengthen the institutional set-up to increase the effectiveness and efficiency of public investment in Colombia.