Creating a Private Participation in Infrastructure Index A workshop with the Economist Intelligence Unit and the Inter-American Development Bank December 19 th, 2008

Meeting agenda 1.Introduction 2.Purpose and structure of the workshop 3.The index – what is it? 4.The index – discussion 5.New indicators – independent 6.New indicators – dependent 7.Category weights 8.Close

Introduction During this session, we will discuss a Private Participation in Infrastructure Index This index will evaluate the national investment climate and business environment for private sector involvement in public works in Latin America and the Caribbean (mainly transport, utilities and telecom): It will systematically evaluate and benchmark country environments and performance It is a quantitative framework which includes both numeric and qualitative evaluations of country environments It is an assessment conducted on a country level, providing a macroeconomic view

Introduction Meeting coordinators Leo Abruzzese, Economist Intelligence Unit Vanesa Sanchez, Economist Intelligence Unit David Bloomgarden, Inter-American Development Bank Participants We have invited a group of sector experts from the Latin American and Caribbean region to participate in this workshop We are also joined by key members of the Inter-American Development Bank Eduardo Bitran, participating via teleconference from Chile

Purpose and structure of the workshop The workshop is structured in the following way: We will first present a preliminary index We will explain the structure and outcome of the index We will ask each person to comment briefly with initial thoughts on the overall purpose and use of the index We will then discuss new indicators for a second, final index This will include a detailed discussion of research methodology …and we will discuss indicator category groupings and weights All indicators should fall under a thematic category Weights will need to be assigned to each category to indicate relative importance

The index – what is it? The index is a dynamic, weighted model which calculates an overall investment climate and business environment score on a scale of This score is a composite of individual indicators that fall under one of the four thematic categories below

The index – discussion Uses and potential objectives of the index: It should serve as an informative tool for investors looking to enter and operate in the region, especially foreign investors unfamiliar with the domestic environment It can also represent a call to reform and recognition of past improvements for country regulators and governments It should increase transparency and accountability for sector stakeholders

New indicators – independent There are three ways in which we envision the creation of new, qualitative indicators that will assess the environment for PPI specifically: 1.A qualitative evaluation of information and research collected on a national level relating to the legal/regulatory, market and macroeconomic or financial environment 1.A qualitative assignment based on pre-existing data and secondary research 1.A calculation based on pre-existing data and indicators We will aim to generate a list of 6-8 new indicators, from which three to four will be selected for inclusion in the final index. The final selection will be shaped as much by meaningfulness as by data availability, comparability and complexity

New indicators – dependent We traditionally use dependent, outcome variables to test the validity and meaningfulness of the index. 1.In this case, higher project success rates and private sector involvement are examples of outcome variables. 1.We are currently using data from the World Bank’s Private Participation in Infrastructure database as a main source 1.We would like to consider additional sources and possibilities for developing and collecting an alternative set of dependent variables

Purpose of weightings: These place more importance on the group of indicators deemed to be most mathematically significant, thus strengthening the index They also provide a qualitative, expert perspective to the index so that it is not necessarily data driven rather than context-driven Current weights default to an equal setting A lack of consensus among the expert community leads to an equal distribution of weights across each indicator included in the final model Category weights

Close Thank you for your participation! We appreciate your contribution and value your expertise Please feel free to submit any additional comments, questions, or suggestions to Vanesa Sanchez at