1. A framework for assessing Public Investment Efficiency in Low-Income Countries

2. Road Map Importance of Public Investment Management Efficiency Development of the index, data and scoring methodology Index components and descriptive statistics

3. Why does the efficiency of public investment matter ? LICs are capital scarce: large “gaps” in health, education, infrastructure Scaling-up of public investment needed to support development process But quality of investment matters!

4. 4 Is Investment Productive?  Essential question: Does spending on public investment translate into productive assets?  Evidence of inadequate efficiency in many LICs  Weaknesses in PFM  Cost over-runs  Poor project selection (wasteful “white elephants”)  Delays in project implementation  Corrupt procurement practices

5. Public Investment Management Index ( PIMI)  Multi dimensional index of the quality of public investment efficiency for 70 countries  Objective is to capture the institutional process underpinning investment. ex ante and ex post dimensions of different stages of the investment process facilitate cross-country comparisons (benchmark LICs to other developing countries) identify reform priorities

6. Value Added of Index  First index to focus on the institutional environment underlying the investment process  Simple and effective tool for benchmarking in LICs amongst other LICs/MICs and by regions  Provides new data for further research on the investment-growth nexus

8. Road Map Data SourcesScoring and MethodologyA few Stylized facts

9. Data Sources  Several data sources used, supplemented with Bank staff questionnaires World Bank PIM case studies PEFA reports (published and unpublished) World Bank Public Expenditure Reviews (PERs) World Bank Country Financial Accountability Assessments Budget institutions database, Dabla-Norris et al. 2010  Strengths: more complete picture of investment process than individual sources  Weaknesses: data reliability and consistency

11. 17 questions 4 stages Strategic Guidance and Project Appraisal Project Selection Project Implementation Project Evaluation and Audit

12. Data and scoring methodology 70 countries (includes 40 LICs) Relies on existing information from various sources, 4 stages, 17 questions. Scoring for each criterion ranges from 0 (lowest) to 4 (highest) Additive aggregation method for construction

13. Additive Aggregation Approach  Robust to other aggregation approaches (simple average across all indicators, principal components analysis)

15. Overall PIMI

16. Overall PIMI: LICs and MICs

17. Heterogeneity Within Region

18. Relatively High Correlation with Other Indicators of Institutional Quality Pair-wise Correlations

19. Positively correlated with Investment spending

20. Positively correlated with Real Income per Capita

21. Next Steps Number of applications Investment-Growth nexus DSGE model of debt-financed investment Investment efficiency and firm performance Extend database to include more countries