1. Theo Ib Larsen and Martin Rama
An Empirical Assessment of Vietnam’s Public Investment Program
Theo Ib Larsen and Martin Rama
The World Bank
Workshop on Development of Large-Scale Infrastructure for Growth and Poverty Reduction
 Hanoi, September 25, 2003

2. The Issue The PIP amounts to roughly 18 % of GDP
It consists of hundreds of projects in a variety of sectors
The impact of those projects is seldom assessed

3. The Project Approach A rate of return is computed
It compares an upfront cost (I)
To a long-term flow of additional income (ΔY)
But only direct income (YD) is taken into account

4. The Statistical Approach
The impact on an outcome is computed
It evaluates the immediate change in income (ΔY)
Associated with public spending (I)
But only local income (YL) is taken into account

5. The Shortcomings of these Approaches
The project approach ignores indirect effects
(such as job creation or congestion)
Which are common in developing countries
The statistical approach ignores network effects
(such as connecting distant places to a grid)
Which are typical of large-scale infrastructure

6. The Nature of Large-Scale Infrastructure Impacts
Externalities 

7. The project approach and the statistical approach need to be combined
This presentation is a first step in that direction
It uses the PIP as an illustration

8. Quantifying Growth Impacts

9. Quantifying Poverty Reduction Impacts

10. The Empirical Strategy
To generate a database of large-scale infrastructure projects from the PIP
Based on actual (not planned) spending
By main sector
By province
By year of spending
By funding
And to match it with provincial growth and poverty indicators

11. First difficulty: Assessing actual spending per year
Delays in implementation in most projects
Scattered information on disbursement
Inconsistencies between donors and PMUs

12. Second
difficulty:
allocating
spending
by province

13. Projects in the Database4 %
Projects (
number )
Investment
Volume (billion VND)
Sector
PIP 1996 -
2000
Database
Share
Energy 14 9
64 %
46,301
44,624
96 %
Transport 42 27
64,622
60,832
94 %
Urban Water /
Sanitation 35 40 %
19,316 1 4
,500 75
Irrigation 16 5
31 %
12,014
9,293
77 %
Large
Scale
infrastructure
107 55 50
142,253 29
,249
Other sectors
124
0 %
183,263
Total
231 32
325,516
Projects (
number )
Projects
Projects ( (
number
number ) )
Investment
Volume (billion VND)
Investment
Investment
Volume (billion VND)
Volume (billion VND)
Sector
PIP 1996 -
2000
Database
Share
PIP 1996 -
2000
Database
Share
Sector
Sector
PIP 1996
PIP 1996 - -
Database
Database
Share
Share
PIP 1996
PIP 1996 - -
Database
Database
Share
Share
2000
2000
2000
2000
Energy 14 9
64 %
46,301
44,624
96 %
Energy
Energy 14 14 9 9
64 %
64 %
46,301
46,301
44,624
44,624
96 %
96 %
Transport 42 27
64 %
64,622
60,832
94 %
Transport
Transport 42 42 27 27
64 %
64 %
64,622
64,622
60,832
60,832
94 %
94 %
Urban Water /
Sanitation
Urban Water
Urban Water 35 14 40 %
19,316 1 4
,500 75 % / /
Sanitation
Sanitation 35 35 14 14 40 40 % %
19,316
19,316 1 1 4 4
,500
,500 75 75 % %
Irrigation 16 5
31 %
12,014
9,293
77 %
Irrigation
Irrigation 16 16 5 5
31 %
31 %
12,014
12,014
9,293
9,293
77 %
77 %
Large -
Scale
infrastructure
Large
Large - -
Scale
Scale
107 55 50 %
142,253 1 29
,249 9 1 %
infrastructure
infrastructure
107
107 55 55 50 50 % %
142,253
142,253 1 1 29 29
,249
,249 9 9 1 1 % %
Other sectors
124
0 %
183,263
0 %
Other sectors
Other sectors
124
124
0 %
0 %
183,263
183,263
0 %
0 %
Total
231 32 %
325,516 1 29
,249 4 %
Total
Total
231
231 32 32 % %
325,516
325,516 1 1 29 29
,249
,249

14. Funding for Large-Scale Infrastructure
Planned (in billion VND)
Actual (in billion VND)
Sector
Total
Government
ODA
Energy
46,301
13,435
33,003
25,743
4,799
20,680
Transport
64,622
16,324
49,098
49,534
16,033
33,558
Urban Water /Sanitation
19,316
4,529
14,876
6,061
1,356
4,705
Irrigation
12,014
6,379
5,644
2,863
488
2,375
Large-Scale infrastructure
142,253
40,667
102,621
84,202
22,676
61,318

15. Share of total Investment
Donors and the PIP
VND billion
Share of total ODA
Share of total Investment
Japan
40,707
40 %
29 %
World Bank
13,623
13 %
11 %
Asian Development Bank
10,136
10 %
8 %
Others and non-identified
38,488
37 %
25 %
Large-scale infrastructure
102,621
100 %
73 %

16. Delays in implementation are considerable

17. But they vary across donors
Donor A
Donor B

18. Few empirical results to report
The database still needs to be adjusted
In the meantime, findings are not reliable

19. Still, some preliminary evidence of externalities
Despite controlling for unobservable province characteristics

20. Conclusion
Assessing growth and poverty impacts of the PIP is not impossible
It requires combining the project approach
And the statistical approach
It also requires a good information system
To monitor project implementation