In a context of decreasing public investment in Latin America, the quality of these investments, as well as the efficiency of public spending, are key to development.
He Inter-American Development Bank (IDB) developed a “Public investment efficiency” index in infrastructurewith the aim of relating the level of quality of investments based on surveys in relation to the value of public capital per capita (capital stock). In this index, Uruguay obtained a value of 0.6 on the measurement that goes from 0 to 1, which places it in the middle of the table compared to other countries in the region.
Ahead of Paraguay, Colombia, Bolivia, Costa Rica, Peru and Argentina, although worse than Dominican Republic, Mexico, Nicaragua, Ecuador and Chili. This is how it was located Uruguay in the index of efficiency in public investment in infrastructure carried out by the IDB, and reported by the weekly Búsqueda; from its score of 0.6. A fact not minor if the importance of the efficiency in public spendingespecially in sensitive tax situations.
In addition to comparing the value of public capital with a survey-based measure of infrastructure quality, a complementary analysis also included measuring the multiplier effect that an increase in public investment has on the quality of infrastructure. economic activity —that is, on the Gross Domestic Product (GDP)—; as well as other aspects related to the efficiency of the use of the resources invested, such as the institutional quality of each country, the “state” of their economies, the level of debt, the exchange rate and the regulation of the labor market.
In this sense, the positive return on GDP of an investment is obtained, at an average level of Latin America, only in the second year; although, after this period, in most countries multipliers greater than or equal to one are recorded. In the case of Uruguay it is 1.3, a figure similar to that of Nicaragua (1.4), higher than that of Paraguay or Ecuador (0.5 and 0.7), but lower than that of Chile (2.7), Colombia (2.4) or Argentina (1.8).
At the regional level, 41% of the money invested could be saved and resources equivalent to 1.4% of GDP could be generated if the efficiency of public spending were improved.
A below average investment
Likewise, the investigation of the IDB reflected that, in 2022, Uruguay had a public investment below the regional average, with 2.3% of GDP when the average in Latin America was 3.4%. This, even in a context in which public investment has been slowing down significantly in Latin American countries, due to the tax pressure and the limited capacity to save to face large projects or sustained growth.
The answer or solution to this, also in the country, would be to strengthen the mechanisms that allow improving the quality of spending. An aspect on which, recently, a research by the Center for Studies of Economic and Social Reality (Ceres).
Despite the low levels of investment in 2022, it is worth remembering that, in recent years, investment in infrastructure has been a focus of the current government’s policies, with projects focused primarily on roads, although also with works such as the Hospital of the Hillalready inaugurated; or future projects in Arazati and the waterway in Merin Lagoon.
Source: Ambito
