On the regional incidence of highway investments in the USA

The objective of this paper was to investigate the regional incidence of the aggregate effects of investment in highways in the US taking into consideration the presence of regional spillovers. The empirical results are based on VAR estimates at both the aggregate and state levels using output, employment, and investment, as well as different measures of highway investments. Empirical results allow us to establish several stylized facts. First, investment in highways affects private sector variables positively at the aggregate level as well as in most states. Second, the regional spillover effects are very significant for all private sector variables. Third, these spillovers have a clear geographical pattern in that they tend to be more important in western states and the corridor between the Great Lakes and the Gulf Coast.     

Attracting investment by introducing the city as a special economic zone: a perspective from Mauritius

Increasing urbanisation require proportionate capital injections in infrastructural projects to respond to local challenges. However, local public investments, especially in low-income economies and nations, are scare due to their low budgetary capacity, resulting in a downgrade of quality in primary public infrastructure; hence, impacting on liveability levels of socio-economic dimensions of these cities. This article proposes a policy tool to address this issue by envisaging the city as a Special Economic Zone with appropriately formulated fiscal mechanisms to encourage private sector investment in the public domain in accordance with guidelines and objectives set by government or public institutions.     

Servant of too many masters: Residential water pricing and the challenge of sustainability

This paper discusses the state-of-the-art of the economic debate around water pricing, focussing on residential water supply and sanitation. Water pricing lays at the crossroads of many fields of economic analysis, and may be used to address many different problems: efficient allocation of water resources, ecological sustainability, guarantee of social rights, financial viability of investments. Different problems require different approaches and solutions. Rather than a “magic stick” that solves all problems by simply “getting the price right”, water charges must be seen as one of the many levers that policymakers can use: possibly a very effective one, but keeping in mind that it cannot solve all problems at the same time. Diversely from a simplistic interpretation of mainstream economics, deeply rooted in the European water policy, full-cost recovery and economic efficiency, social and ecological sustainability are separate issues that must not be confounded. This statement leads the way to a wider and more creative use of public finance.     

Public surface transportation and regional output: A spatial panel approach

This paper studies regional impact of three mature public surface transportation infrastructures in the Northeast corridor of the US: highway, public railway and public transit. Infrastructure stock is valued in real terms from 1991 to 2009. A spatial panel approach with fixed effects is adopted to test the hypothesis of spillovers by allowing for spatial dependence. The result shows that public surface transportation infrastructure in general does have a significant impact on regional output, most of which is from spillover effect; highways have an overwhelming influence through both local effects and spillover effects. The impacts from public railway and public transit are not significant, but transit does show a positive though small spillover effect.     

Investors,taxation and the housing boom

In recent years considerable attention has been paid to the activity of investors in private rental housing. Underpinning this interest has been the perceived effects of changes during the 1980s to the tax treatment of investment in private rental housing. Of particular interest has been whether or not landlords should be able to ‘negatively gear’, or deduct from their taxable income the interest losses they incur on the rental properties. According to real estate lobby groups, the federal government's decision in July 1985 to ‘quarantine’ negative gearing in residential investments decimated the supply of private rental housing, and this in turn was said to be the prime reason for escalating rents and tightening vacancy rates in some capital cities. The campaign by the real estate lobby groups received considerable media coverage and eventually led to one of the few policy backdowns by the current federal government. In August 1987, and in an otherwise very tight budget, negative gearing was fully reintroduced.     

Effects of incentive applications on technical efficiencies: Empirical evidence from Ugandan water utilities

This study outlines practical cases of incentive applications in water utilities operating under public–public management settings in Uganda, Kenya, Tanzania and Zambia. The paper dispels a common belief that incentive applications are only possible under public–private management settings. Specifically, the study utilizes empirical historical data (period 2000–2006) in 15 National Water and Sewerage Corporation (NWSC) water sub-utilities in Uganda. Applying stochastic frontier analysis (SFA) econometric methods using a log–linear input distance specification, we find that financial incentive application has positive impacts on reduction of firm technical inefficiencies. The empirical evidence contributes to literature, debate and water utility management in a number of ways. In particular, it shows that, apart from having positive effects under public–private partnership settings, financial incentive applications can have similar effects under public–public management settings.     

The private sector and public space in Dutch city centres

Private sector involvement in the design and financing of urban redevelopment projects has been relatively rare in the Netherlands. The public sector has traditionally played a central role in spatial planning and development. Since the 1980s, however, local authorities have been sharing the responsibility for urban development with the private sector. This article explores the viability of claims drawn from the literature about the effects of private sector involvement in redeveloped public space. Confronting those claims with our empirical material, we expected to find that the participation of the private sector would increase the redevelopment budget but would also lead to restrictions on public access. These two expectations are evaluated in light of the experience in four redeveloped squares in four Dutch cities: Rotterdam, Dordrecht, Enschede and ’s-Hertogenbosch. We found that actors on the public and private sides have different interpretations of what constitutes a direct financial contribution. Those from the private sector believe they have made significant contributions, while those from the public sector see themselves as the sole funders. But they agree on the issue of free access: both public and private actors deny any negative effects of private sector involvement in this respect.     

Mechanisms for protecting returns on private investments in public infrastructure projects

Despite the widespread attention for the private financing of infrastructure projects, actual empirical work on financing public-private partnerships remains limited. Especially the topics of return on equity and lenders’ cash flow control in relation to uncertainty are under-researched. The aim of this paper is to investigate and discuss the mechanisms applied by private financiers of infrastructure projects to protect their returns on investment. Using semi-structured interviews, the qualitative viewpoints of infrastructure financiers and their consultants on infrastructure investment are examined. The findings identify nine control mechanisms that financiers apply, including a range of asset and risk diversification portfolio strategies for their infrastructure investments, and reveal that they depend on governance mechanisms relating to the project environment, relations, knowledge and expertise. Hence, this study provides a better understanding of the actions and mechanisms applied to protect a return on infrastructure investments that leverage partnering strategies between public authorities and private investors in public infrastructure projects. This contributes to the debate on project financing under uncertainty and its implications for project governance in public private partnerships.     

THE LANDSCAPE OF URBAN PRESERVATION: A SPATIAL ANALYSIS OF FEDERAL REHABILITATION TAX CREDITS IN RICHMOND,VIRGINIA

Historic preservationists tout the federal historic rehabilitation tax credit (RTC) as one of the nation's most successful urban revitalization programs, but minimal research exists on the local use of this private‐sector, market‐responsive tool. Using geocoded data on RTC investments in Richmond, Virginia that occurred between 1997 and 2010, the research explores the city's RTC geography, finding that these investments are most intense in the central city, but have centrifugally diffused outward over time. The research shows that RTC investments are contributing to Richmond's postindustrial transformation, offer a measure of resiliency in the recently volatile real estate market, and function as a de facto housing policy without directly resulting in gentrification. The research offers policymakers improved understanding about the urban geography and spatial effects of RTCs and outlines potential policies that can capitalize on and further encourage these private‐sector investments.     

Determinants of efficiency improvement in the Spanish public lighting sector

This research analyzes the factors that can improve the efficiency of public lighting. First, the annual and inter-annual efficiency levels are calculated. Second, the effects of a set of environmental variables on these efficiency levels are checked with a truncated regression model. The results show that public management is more efficient than private or mixed management. Higher tourism, stronger local governments, and more hours of sunlight appear to improve efficiency. Local governments with the highest budgetary revenues and the most urbanized area experience the greatest improvement in efficiency year after year.     

Developing a multicriteria approach for the measurement of sustainable performance

In Australia, cost–benefit analysis (CBA) is one of the conventional tools used widely by the public and the private sectors in the appraisal of projects. It measures and compares the total costs and benefits of projects that are competing for scarce resources in monetary terms. Growing concerns that the values of environmental goods and services are often ignored or underestimated in the CBA approach have led to the overuse and depletion of environmental assets. A model of a sustainability index as an evaluation tool that combines economic, social and environmental criteria into an indexing algorithm is presented and described. The sustainability index uses monetary and non-monetary approaches to rank projects and facilities on their contribution to sustainability. This process enables the principle of trade-off to occur in the decision-making process and thereby allows environmental values to be considered when selecting a development option. This makes it possible to optimize financial return, maximize resource consumption and minimize detrimental effects to the natural and man-made world. A case study is used to demonstrate the model.     

Endogenous R&D spillover and location choice in a mixed oligopoly

We consider a three-stage game where a public firm and a private firm choose R&D, location, and price, under the assumption that R&D spillovers rely on their locations. We show that, in equilibrium, whether the public firm engages in innovation more aggressively than the private firm depends on the degree of spillovers. Moreover, firms’ equilibrium locations exhibit neither maximal nor minimal differentiation. Finally, privatization could reduce social welfare because it may generate inefficient location and insufficient R&D investment. This suggests that a mixed duopoly could be socially preferable to a private duopoly in the presence of endogenous R&D spillovers.     

The option value of government guarantees in infrastructure projects

The participation of private capital in public infrastructure investment projects has been sought by many governments who perceive this as a way to overcome budgetary constraints and foster economic growth. For some types of projects, this investment may require government participation in the form of project guarantees in order to reduce the risk to the private investor, and as a consequence, the government assumes a contingent liability which may have significant future budgetary impacts. We present a minimum traffic guarantee (MTG) real options model that differs from most of the literature in the field by using market data to determine stochastic project parameters. This model can be used to assess the value of these guarantees, allows the government to analyse the cost–benefit of each level of support, and proposes an alternative to limit the exposure of the government while still maintaining the benefits to the private investor. We apply this model to the projected 1000 mile long BR‐163 toll road that will link the Brazilian Midwest to the Amazon River. We conclude that the use of public–private partnerships (PPP) with guarantees and caps on total government outlays can be modelled effectively using option pricing methods and can be a solution to attract private investment to high risk public infrastructure projects.     

Developing a multicriteria approach for the measurement of sustainable performance

In Australia, cost-benefit analysis (CBA) is one of the conventional tools used widely by the public and the private sectors in the appraisal of projects. It measures and compares the total costs and benefits of projects that are competing for scarce resources in monetary terms. Growing concerns that the values of environmental goods and services are often ignored or underestimated in the CBA approach have led to the overuse and depletion of environmental assets. A model of a sustainability index as an evaluation tool that combines economic, social and environmental criteria into an indexing algorithm is presented and described. The sustainability index uses monetary and non-monetary approaches to rank projects and facilities on their contribution to sustainability. This process enables the principle of trade-off to occur in the decision-making process and thereby allows environmental values to be considered when selecting a development option. This makes it possible to optimize financial return, maximize resource consumption and minimize detrimental effects to the natural and man-made world. A case study is used to demonstrate the model.     

Regional policy and spillovers from FDI in the UK

This paper tests one of the fundamental assumptions of regional policy makers over the last 20 years. Western governments, in seeking to attract internationally mobile capital have spent significant sums of public money on subsidies and grants. This is justified on the basis that the social returns to FDI are significantly greater than the private returns, due to productivity or technology spillovers from inward investors to domestic industry. However, this paper generates some estimates of these spillovers for both assisted areas and non-assisted areas in the UK, and questions the size of these social returns, arguing that productivity spillovers do not occur in regions where significant inward investment incentives are available.Thanks are due to Holger Gorg, Sourafel Girma, Jim Love, Max Munday, Nigel Pain, Jim Taylor, Colin Wern and to seminar participants in Cardiff, Aston, Lancaster and London for comments on an earlier version of this paper.Received: June 2001/Accepted: May 2003     

The urban causes of financial stress: An analysis of Norwegian municipalities and the economic resource‐squeeze

The article discusses potential causes of a tight “budgetary squeeze” in Norwegian central cities. The dependent variable, financial stress, is measured as the ratio of expenditure growth as compared to the growth of tax revenues. Budgetary stress turns out to be positively correlated with the centrality (measured by a set of indicators) of the cities. This finding is analyzed by means of path‐analysis. The bivariate relation is decomposed in a week, direct effect of centrality, and indirect effects mediated through the municipal activity‐level, the local revenues and expenditure needs generated by an elderly population. Political competition and fragmentation do not influence the dependent variable significantly, nor do bad housing conditions explain any of the correlation between centrality and financial stress.     

Regional knowledge production in nanomaterials: a spatial filtering approach

Nanomaterials are seen as a key technology for the twenty-first century, and much is expected of them in terms of innovation and economic growth. They could open the way to many radically new applications, which would form the basis of innovative products. As nanomaterials are still in their infancy, universities, public research institutes and private businesses seem to play a vital role in the innovation process. Existing literature points to the importance of knowledge spillovers between these actors and suggests that the opportunities for these depend on proximity, with increasing distance being detrimental to the extent that spillovers can be realised. Due to the technological complexity, however, proximity could also be less important as relevant nanomaterials research is globally dispersed. Hence in this paper, we analyse the effects of co-location of R&D activities on nanomaterial patenting. Based on European Patent Office data at the German district level (NUTS-3), we estimate two negative binomial models in a knowledge production function framework and include a spatial filtering approach to adjust for spatial autocorrelation. Our results indicate that there is a significant positive effect of both public and private R&D on the production of nanomaterial patents. Moreover, we find a positive interaction between them which hints at the importance of their co-location for realising the full potential of an emerging technology like nanomaterials.     

Standardising Heterogeneity: Public Housing and the Absent(ed) Architect

Does the decentralisation of housing provision by government necessarily lead to a less standardised and more diverse approach to design and planning? Can targeted financial programmes effectively trigger the forces of the free market to deliver more innovative and varied solutions to housing? Michael Bell , Professor of Architecture at Columbia University in New York, reviews the impact of the introduction of tax credits and other initiatives, brought in to encourage public/private partnerships and the involvement of speculative developers in the 1980s and 1990s, on the quality of public housing in the US. In doing so, he puts out a call to architects to acquaint and engage themselves with the complexities of the financial markets.     

Mega-event effects on the housing market: Evidence from the Beijing 2008 Olympic Games

Mega-event regeneration involves extensive government funds and public participation; thus, this study emphasises the importance of verifying if these financial and human investments can be justified by the net effects of mega-event regeneration. Accordingly, the contingent valuation method is used to establish a framework to quantify the welfare effects of event regeneration from the economic, social and environmental perspectives. We proposed a theoretical framework that enables the ranking of various event regeneration effects based on public welfare improvement. This holistic approach takes into account changes in economic, environmental, and social housing conditions due to mega-event simultaneously. This leads to more reliable estimation of mega-event effects on housing market. Our empirical findings indicate that, overall, accessible public transport, a sense of feeling good, air quality, relieved traffic congestion and green space are the top five welfare enhancers. Nevertheless, residents from different housing sectors or geographic regions value mega-event effects differently. Our results can assist the government to efficiently allocate limited public resources by looking after public needs. A better understanding of the heterogeneity of event regeneration effects on different housing sectors and geographic locations will also help governments to tailor public policies based on various social groups.     

政府投资公益性建设项目的博弈分析

目前我国政府投资公益性建设项目中普遍存在“三超”现象,政府机构与建设单位之间总是处于超投资,追加投资状态,为了深入探讨“三超”现象,引入博弈论方法,按照现行工程管理模式下信息不对称的特征及信息模型,建立了项目各主体之间的行为动态博弈模型,基于寻租经济理论,给出了混合纳什均衡解,根据均衡解给出解决权力寻租活动的相应对策,并提出完善推进代建制、有效监督机制和权力约束机制的政策建议,以从根本上杜绝建设项目的寻租行为,最大限度降低三超现象。