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Public investment for sustainable growth – managing subnational risks
Ehtisham Ahmad* 
Ehtisham Ahmad
Affiliation: London School of Economics and Political Science, London, UK University of Bonn, Bonn, Germany Zhejiang University, Hangzhou, Zhejiang Province, P. R. China
 0000-0002-6054-3336
Correspondence
s.e.ahmad@lse.ac.uk
Conference keynote | Year: 2017 | Pages: 137 - 157 | Volume: 41 | Issue: 2 Received: May 17, 2017 | Accepted: May 25, 2017 | Published online: June 15, 2017
|
FULL ARTICLE
FIGURES & DATA
REFERENCES
CROSSMARK POLICY
METRICS
LICENCING
PDF
|
Goods/inputs
|
Conversion
factor
|
|
Social
discount rate
|
6%
(8% and 12% in previous years)
|
|
Exchange
rate
|
1.01
|
|
Emissions
(CO2)
|
2.213
pesos per ton of equivalent carbon emission
|
|
Land
|
Market
value (without any correction)
|
|
Domestic
goods and inputs
|
Market
value – VAT
|
|
Importable
materials
|
(Market
value-duties) x currency conversion factor
|
|
Fuels
|
Depends
on type of fuel and vehicle
|
|
High-skill
labor
|
Market
value x factor of conversion for high-skilled labor (0.98)
|
|
Medium-skill
labor
|
Market
value x factor of conversion for mid-skilled labor (0.68)
|
|
Low-skill
labor
|
Market
value x factor of conversion for low-skilled labor (0.62)
|
|
General
expenses and profits
|
Market
value – VAT
|
See Ahmad and Viscarra (2016).
|
|
|
K=0.81
|
K=0.5
|
K=0.25
|
|
Groups
|
Class
|
L=0.37
M=0.40
H=0.70
|
L=0.62
M=0.68
H=0.98
|
L=0.87
M=0.90
H=1.00
|
L=0.37
M=0.4
H=0.7
|
L=0.62
M=0.68
H=0.98
|
L=0.87
M=0.90
H=1.00
|
L=0.37
M=0.40
H=0.70
|
L=0.62
M=0.68
H=0.98
|
L=0.87
M=0.93
H=1.00
|
|
Flour, pasta, cereals
|
IM
|
0.986
|
0.986
|
0.986
|
0.986
|
0.986
|
0.986
|
0.986
|
0.986
|
0.986
|
|
Vegetables
|
EX
|
0.934
|
0.929
|
0.929
|
0.935
|
0.931
|
0.93
|
0.936
|
0.932
|
0.932
|
|
Fruits
|
EX
|
0.541
|
0.538
|
0.537
|
0.542
|
0.539
|
0.539
|
0.543
|
0.54
|
0.539
|
|
Meats, sausages
|
IM
|
0.988
|
0.988
|
0.988
|
0.988
|
0.988
|
0.988
|
0.988
|
0.988
|
0.988
|
|
Dairy products, cheese,
eggs
|
NT
|
0.988
|
1.134
|
1.208
|
0.954
|
1.074
|
1.174
|
0.927
|
1.047
|
1.147
|
|
Edible oils, fats
|
IM
|
0.987
|
0.987
|
0.987
|
0.987
|
0.987
|
0.987
|
0.987
|
0.987
|
0.987
|
|
Fish, crustaceans, mollusks
|
EX
|
0.985
|
0.982
|
0.981
|
0.986
|
0.983
|
0.982
|
0.987
|
0.984
|
0.983
|
|
Animal feed
|
NT
|
0.635
|
0.755
|
0.86
|
0.611
|
0.73
|
0.836
|
0.591
|
0.711
|
0.816
|
|
Fuels
|
IM
|
0.991
|
0.991
|
0.991
|
0.991
|
0.991
|
0.991
|
0.991
|
0.991
|
0.991
|
|
Other food products
|
IM
|
0.977
|
0.977
|
0.977
|
0.977
|
0.977
|
0.977
|
0.977
|
0.977
|
0.977
|
|
Liquor
|
EX
|
0.961
|
0.953
|
0.952
|
0.965
|
0.956
|
0.955
|
0.967
|
0.958
|
0.957
|
|
Non-alcoholic beverages
|
NT
|
0.550
|
0.661
|
0.682
|
0.513
|
0.625
|
0.645
|
0.484
|
0.595
|
0.616
|
|
Tobacco
|
NT
|
0.464
|
0.556
|
0.585
|
0.437
|
0.529
|
0.558
|
0.415
|
0.507
|
0.536
|
|
Textiles, clothing,
footwear
|
IM
|
0.982
|
0.982
|
0.982
|
0.982
|
0.982
|
0.982
|
0.982
|
0.982
|
0.982
|
|
Material for conservation,
repair of dwelling
|
IM
|
0.949
|
0.949
|
0.949
|
0.949
|
0.949
|
0.949
|
0.949
|
0.949
|
0.949
|
|
Stationery, office supplies
|
EX
|
0.975
|
0.969
|
0.968
|
0.977
|
0.971
|
0.97
|
0.978
|
0.973
|
0.972
|
|
Printing, publishing
|
NT
|
0.653
|
0.846
|
1.014
|
0.63
|
0.823
|
0.991
|
0.611
|
0.805
|
0.973
|
|
Pharmaceutical products
|
NT
|
0.678
|
0.856
|
0.888
|
0.652
|
0.829
|
0.861
|
0.631
|
0.808
|
0.84
|
|
Toiletries, cosmetics
|
NT
|
0.847
|
1.064
|
1.098
|
0.827
|
1.044
|
1.078
|
0.811
|
1.028
|
1.062
|
|
Glassware, crystal,
tableware, household utensils
|
NT
|
0.535
|
0.639
|
0.65
|
0.498
|
0.602
|
0.613
|
0.468
|
0.572
|
0.583
|
|
Electronic artifacts, large
size tools, equipment for the household
|
NT
|
0.664
|
0.83
|
0.853
|
0.644
|
0.81
|
0.833
|
0.627
|
0.794
|
0.817
|
|
Electronic artifacts, small
size tools, equipment for the household
|
NT
|
0.692
|
0.853
|
0.87
|
0.675
|
0.837
|
0.853
|
0.662
|
0.824
|
0.84
|
|
Furniture
|
NT
|
0.655
|
0.847
|
1.012
|
0.592
|
0.785
|
0.95
|
0.542
|
0.735
|
0.899
|
|
Other electronic artifacts,
tools, equipment for the household
|
NT
|
0.563
|
0.686
|
0.793
|
0.54
|
0.662
|
0.77
|
0.521
|
0.644
|
0.751
|
|
Electricity
|
NT
|
1.051
|
1.111
|
1.121
|
0.784
|
0.845
|
0.855
|
0.569
|
0.63
|
0.64
|
|
Gas supply
|
IM
|
0.995
|
0.995
|
0.995
|
0.995
|
0.995
|
0.995
|
0.995
|
0.995
|
0.995
|
|
Basic public services
|
NT
|
1.043
|
1.248
|
1.27
|
0.896
|
1.100
|
1.122
|
0.776
|
0.981
|
1.003
|
|
Repair of household goods
|
NT
|
0.732
|
0.936
|
0.969
|
0.71
|
0.913
|
0.946
|
0.691
|
0.894
|
0.927
|
|
Hotels, restaurants
|
NT
|
1.036
|
1.232
|
1.389
|
0.999
|
1.193
|
1.352
|
0.968
|
1.163
|
1.321
|
|
Transportation
|
NT
|
0.645
|
0.79
|
0.811
|
0.593
|
0.738
|
0.759
|
0.55
|
0.696
|
0.717
|
|
Mail, courier services
|
NT
|
0.541
|
0.758
|
0.938
|
0.509
|
0.725
|
0.905
|
0.482
|
0.699
|
0.879
|
|
Telephone services
|
NT
|
0.877
|
1.026
|
1.059
|
0.72
|
0.868
|
0.902
|
0.593
|
0.741
|
0.775
|
|
Financial services
|
NT
|
0.41
|
0.525
|
0.539
|
0.386
|
0.501
|
0.516
|
0.367
|
0.482
|
0.497
|
|
Assurance, reinsurance
services
|
NT
|
0.706
|
0.893
|
0.918
|
0.651
|
0.838
|
0.863
|
0.607
|
0.794
|
0.819
|
|
Services to companies
|
NT
|
0.570
|
0.709
|
0.728
|
0.518
|
0.656
|
0.675
|
0.475
|
0.614
|
0.633
|
|
Rents (apartments, houses)
|
NT
|
1.026
|
1.031
|
1.032
|
0.702
|
0.708
|
0.708
|
0.441
|
0.446
|
0.447
|
|
Education
|
NT
|
0.820
|
1.066
|
1.091
|
0.793
|
1.039
|
1.064
|
0.772
|
1.018
|
1.043
|
|
Medical, health services
|
NT
|
0.768
|
0.985
|
1.011
|
0.735
|
0.952
|
0.978
|
0.708
|
0.926
|
0.952
|
|
Entertainment
|
NT
|
0.673
|
0.911
|
1.121
|
0.621
|
0.859
|
1.069
|
0.579
|
0.817
|
1.027
|
|
Other services
|
NT
|
0.217
|
0.282
|
0.336
|
0.191
|
0.256
|
0.31
|
0.17
|
0.235
|
0.288
|
|
Mining
|
EX
|
0.981
|
0.976
|
0.976
|
0.982
|
0.978
|
0.977
|
0.983
|
0.979
|
0.978
|
|
Construction
|
NT
|
0.563
|
0.713
|
0.845
|
0.543
|
0.693
|
0.824
|
0.526
|
0.676
|
0.807
|
|
Commerce
|
NT
|
0.553
|
0.734
|
0.87
|
0.518
|
0.699
|
0.834
|
0.489
|
0.67
|
0.806
|
|
Chemical industry
|
IM
|
0.989
|
0.989
|
0.989
|
0.989
|
0.989
|
0.989
|
0.989
|
0.989
|
0.989
|
|
Basic industry metals
|
EX
|
0.974
|
0.97
|
0.969
|
0.976
|
0.972
|
0.971
|
0.977
|
0.973
|
0.972
|
L = low-skilled labor; M = medium-skilled labor; H = high-skilled labor, K = capital, IM = importable sectors; EX = exportable sectors; NT = non-tradable sectors. Source: Ahmad and Viscarra (2016). Calculations based on the input-output matrix 2008, Central Bank of Chile.
|
|
K=0.81
(A1)
|
K=0.5
(A2)
|
K=0.25
(A3)
|
|
Groups
|
L=0.37
M=0.43
H=0.73
|
L=0.62
M=0.68
H=0.98
|
L=0.87
M=0.93
H=1
|
L=0.37
M=0.43
H=0.73
|
L=0.62
M=0.68
H=0.98
|
L=0.87
M=0.93
H=1
|
L=0.37
M=0.43
H=0.73
|
L=0.62
M=0.68
H=0.98
|
L=0.87
M=0.93
H=1
|
|
Flour, pasta, cereals
|
0.404
|
0.409
|
0.321
|
0.435
|
0.445
|
0.351
|
0.459
|
0.470
|
0.376
|
|
Vegetables
|
0.395
|
0.380
|
0.316
|
0.430
|
0.426
|
0.351
|
0.458
|
0.454
|
0.379
|
|
Fruits
|
-0.030
|
-0.089
|
-0.317
|
0.046
|
0.006
|
-0.240
|
0.108
|
0.067
|
-0.178
|
|
Meats, sausages
|
0.255
|
0.260
|
0.182
|
0.280
|
0.299
|
0.207
|
0.301
|
0.320
|
0.227
|
|
Oils, fats
|
0.354
|
0.355
|
0.311
|
0.368
|
0.369
|
0.325
|
0.379
|
0.380
|
0.336
|
|
Fish, crustaceans, mollusks
|
0.228
|
0.242
|
0.154
|
0.244
|
0.257
|
0.170
|
0.257
|
0.270
|
0.183
|
|
Fuels
|
0.847
|
0.852
|
0.837
|
0.864
|
0.869
|
0.854
|
0.877
|
0.882
|
0.868
|
|
Other food products
|
0.523
|
0.535
|
0.461
|
0.546
|
0.557
|
0.482
|
0.563
|
0.574
|
0.499
|
|
Liquor
|
0.474
|
0.505
|
0.416
|
0.503
|
0.533
|
0.445
|
0.526
|
0.556
|
0.468
|
|
Textiles, clothing,
footwear
|
0.494
|
0.497
|
0.385
|
0.523
|
0.527
|
0.414
|
0.547
|
0.550
|
0.438
|
|
Material for conservation,
repair of dwelling
|
0.451
|
0.460
|
0.383
|
0.479
|
0.488
|
0.411
|
0.502
|
0.510
|
0.433
|
|
Stationery, office supplies
|
0.478
|
0.502
|
0.398
|
0.514
|
0.538
|
0.435
|
0.544
|
0.567
|
0.465
|
|
Mining
|
0.538
|
0.545
|
0.512
|
0.596
|
0.603
|
0.569
|
0.643
|
0.649
|
0.616
|
|
Chemical industry
|
0.527
|
0.539
|
0.505
|
0.568
|
0.580
|
0.547
|
0.601
|
0.613
|
0.586
|
|
Basic industry metals
|
0.491
|
0.496
|
0.455
|
0.509
|
0.513
|
0.472
|
0.523
|
0.527
|
0.493
|
Source: Ahmad and Viscarra (2016). A number of simulations were carried out with alternative assumptions concerning the tradable and non-tradable sectors.
|
Groups
|
e = 0
|
e = 0.5
|
e = 1
|
e = 2
|
e = 5
|
|
Rents
(houses, apartments)
|
1
|
1
|
1
|
1
|
1
|
|
Transportation
|
2
|
3
|
15
|
21
|
19
|
|
Other
services
|
3
|
17
|
24
|
24
|
24
|
|
Education
|
4
|
23
|
25
|
25
|
25
|
|
Telephone
services
|
5
|
16
|
22
|
23
|
23
|
|
Hotels,
restaurants
|
6
|
11
|
16
|
18
|
18
|
|
Textiles,
clothing, footwear
|
7
|
7
|
12
|
14
|
8
|
|
Health
|
8
|
13
|
18
|
16
|
10
|
|
Meats,
sausages
|
9
|
5
|
4
|
6
|
9
|
|
Public
basic services
|
10
|
2
|
2
|
2
|
2
|
|
Financial
services
|
11
|
14
|
17
|
15
|
14
|
|
Flour,
pasta, cereals
|
12
|
6
|
5
|
17
|
17
|
|
Entertainment
|
13
|
26
|
26
|
26
|
27
|
|
Electricity
|
14
|
4
|
3
|
5
|
7
|
|
Vegetables
|
15
|
9
|
11
|
12
|
15
|
|
Non-alcoholic
beverages
|
16
|
8
|
7
|
7
|
6
|
|
Pharmaceutical
products
|
17
|
21
|
21
|
20
|
20
|
|
Dairy
products, cheese, eggs
|
18
|
10
|
10
|
11
|
13
|
|
Other
food products
|
19
|
19
|
20
|
19
|
22
|
|
Gas
|
20
|
12
|
8
|
10
|
12
|
|
Liquor
|
21
|
15
|
6
|
3
|
3
|
|
Fruits
|
22
|
18
|
13
|
8
|
5
|
|
Tobacco
|
23
|
25
|
23
|
22
|
21
|
|
Toiletries,
cosmetics
|
24
|
27
|
27
|
27
|
26
|
|
Fish,
crustaceans, mollusks
|
25
|
20
|
9
|
4
|
4
|
|
Oils,
fats
|
26
|
22
|
14
|
9
|
16
|
|
Fuels
|
27
|
24
|
19
|
13
|
11
|
Source: Ahmad and Viscarra (2106). Note 1 is the highest rank social cost, and least attractive to tax and 27 the lowest rank and most attractive to raise an additional dollar in revenue.
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|
|
June, 2017
II/2017
|
