IDEAS home Printed from https://ideas.repec.org/a/ers/journl/vxxivy2021i3bp769-786.html
   My bibliography  Save this article

Cost-Effectiveness Analysis (CEA) of Public Investment Projects

Author

Listed:
  • Krzysztof Jarosinski

Abstract

Purpose: The aim of the article is to investigate the conditions and possibilities of wider use of methods of cost-effectiveness analysis of investment projects in the public sector, and to assess the role in decision-making in the conditions of crisis phenomena, in particular the risk of excessive budget deficit and public debt. Design/Methodology/Approach: The concept of the article refers to the changes in the global economy and in the public finance sector in the face of the crisis. As part of the research, negative economic and social changes were observed. In 2020, many countries saw a significant decline in the value of GDP, with a simultaneous increase in the budget deficit and public debt. This resulted in changes in the financing of public tasks. Research proves that there is a need to improve the efficiency of public spending and a wider use cost-effectiveness analysis. Findings: During the research, it was noticed that in the changing economic conditions it is justified to pay attention to increasing the efficiency of public investment projects and to a wider use of cost-effective methods of project analysis. The importance of this group of methods is related to the possibility of analyzing and evaluating projects for which it is not possible to measure the achieved effects in monetary terms. It was noticed that public investment projects, especially small ones, were not always analyzed and assessed. A broader and precise application of cost effectiveness analysis (CEA) can lead to the improvement of economic efficiency in the wider social dimension. The effects of crisis phenomena may be long-term, as indicated by the results of prospective studies. Practical implications: The use of CEA can disseminate research methods and improve efficiency where other research is often impossible. Originality/Value: The article is an attempt to draw attention to the need to improve the effectiveness of public funds in the conditions of crisis phenomena. The practice has not always been related to examining the effectiveness of public spending, especially those of less value.

Suggested Citation

  • Krzysztof Jarosinski, 2021. "Cost-Effectiveness Analysis (CEA) of Public Investment Projects," European Research Studies Journal, European Research Studies Journal, vol. 0(3B), pages 769-786.
    • Handle: RePEc:ers:journl:v:xxiv:y:2021:i:3b:p:769-786
    as

    Download full text from publisher

    File URL: https://ersj.eu/journal/2500/download
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Juan Carluccio & Clément Mazet-Sonilhac & Jean-Stéphane Mésonnier, 2019. "Investment and the WACC: new micro evidence for France," Working papers 710, Banque de France.
    2. Fredrik Andersson & Henrik Jordahl & Jens Josephson, 2019. "Outsourcing Public Services: Contractibility, Cost, and Quality," CESifo Economic Studies, CESifo Group, vol. 65(4), pages 349-372.
    3. Beqiraj, Elton & Fedeli, Silvia & Forte, Francesco, 2018. "Public debt sustainability: An empirical study on OECD countries," Journal of Macroeconomics, Elsevier, vol. 58(C), pages 238-248.
    4. Ulrike Mandl & Adriaan Dierx & Fabienne Ilzkovitz, 2008. "The effectiveness and efficiency of public spending," European Economy - Economic Papers 2008 - 2015 301, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    5. Asma Arif & Mujahid Hussain, 2018. "Economic, Political and Institutional Determinants of Budget Deficits Volatility: A Panel Data Analysis," International Journal of Economics & Business Administration (IJEBA), International Journal of Economics & Business Administration (IJEBA), vol. 0(3), pages 98-114.
    6. Alberto Alesina, 1987. "A Positive Theory of Fiscal Deficits and Government Debt in a Democracy," UCLA Economics Working Papers 435, UCLA Department of Economics.
    7. Garber, Alan M. & Phelps, Charles E., 1997. "Economic foundations of cost-effectiveness analysis," Journal of Health Economics, Elsevier, vol. 16(1), pages 1-31, February.
    8. Peter Mackie & John Nellthorp & James Laird, 2005. "Where to Use Cost Effectiveness Techniques Rather Than Cost Benefit Analysis," World Bank Publications - Reports 11795, The World Bank Group.
    9. Kamiguchi, Akira & Tamai, Toshiki, 2019. "Public investment, public debt, and population aging under the golden rule of public finance," Journal of Macroeconomics, Elsevier, vol. 60(C), pages 110-122.
    10. repec:ers:journl:v:vi:y:2018:i:3:p:98-114 is not listed on IDEAS
    11. Geraint Johnes, 2015. "Evaluating the efficiency of public services," IZA World of Labor, Institute of Labor Economics (IZA), pages 196-196, October.
    12. Volodymyr Lipkan & Lydmyla Vasutynska & Tetyana Syvak, 2018. "Methods Of Analysis Of The Effectiveness Of Public Sector Projects: Features And Constraints," Baltic Journal of Economic Studies, Publishing house "Baltija Publishing", vol. 4(1).
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Glenn Jenkins & Chun-Yan Kuo & Arnold C. Harberger, 2011. "Cost-Benefit Analysis for Investment Decisions: Chapter 15 (Cost-Effectiveness and Cost-Utility Analysis)," Development Discussion Papers 2011-15, JDI Executive Programs.
    2. Pieter H. M. van Baal & Talitha L. Feenstra & Rudolf T. Hoogenveen & G. Ardine de Wit & Werner B. F. Brouwer, 2007. "Unrelated medical care in life years gained and the cost utility of primary prevention: in search of a ‘perfect’ cost–utility ratio," Health Economics, John Wiley & Sons, Ltd., vol. 16(4), pages 421-433, April.
    3. Antonio Sánchez Soliño, 2019. "Sustainability of Public Services: Is Outsourcing the Answer?," Sustainability, MDPI, vol. 11(24), pages 1-12, December.
    4. Mira Johri & Laura J. Damschroder & Brian J. Zikmund‐Fisher & Peter A. Ubel, 2005. "The importance of age in allocating health care resources: does intervention‐type matter?," Health Economics, John Wiley & Sons, Ltd., vol. 14(7), pages 669-678, July.
    5. Michał Mackiewicz, 2006. "Przyczyny deficytu finansów publicznych w świetle nowej ekonomii politycznej," Gospodarka Narodowa. The Polish Journal of Economics, Warsaw School of Economics, issue 3, pages 1-22.
    6. Muscatelli, Vito A. & Natale, Piergiovanna & Tirelli, Patrizio, 2012. "A simple and flexible alternative to Stability and Growth Pact deficit ceilings. Is it at hand?," European Journal of Political Economy, Elsevier, vol. 28(1), pages 14-26.
    7. Scott Johnson & Matthew Davis & Anna Kaltenboeck & Howard Birnbaum & ElizaBeth Grubb & Marcy Tarrants & Andrew Siderowf, 2011. "Early retirement and income loss in patients with early and advanced Parkinson’s disease," Applied Health Economics and Health Policy, Springer, vol. 9(6), pages 367-376, November.
    8. Bongsuk Sung & Myung-Bae Yeom & Hong-Gi Kim, 2017. "Eco-Efficiency of Government Policy and Exports in the Bioenergy Technology Market," Sustainability, MDPI, vol. 9(9), pages 1-18, September.
    9. Alessandra Cepparulo & Gilles Mourre, 2020. "How and How Much? The Growth-Friendliness of Public Spending through the Lens," European Economy - Discussion Papers 132, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    10. Stephen Morris & Stephen Coate, 1999. "Policy Persistence," American Economic Review, American Economic Association, vol. 89(5), pages 1327-1336, December.
    11. Casalin, Fabrizio & Cerniglia, Floriana & Dia, Enzo, 2023. "Stock-flow adjustments, public debt management and interest costs," Economic Modelling, Elsevier, vol. 129(C).
    12. Donato Masciandaro, 1995. "Designing a central bank: Social player, monetary agent, or banking agent?," Open Economies Review, Springer, vol. 6(4), pages 399-410, October.
    13. Richard H. Chapman & Marc Berger & Milton C. Weinstein & Jane C. Weeks & Sue Goldie & Peter J. Neumann, 2004. "When does quality‐adjusting life‐years matter in cost‐effectiveness analysis?," Health Economics, John Wiley & Sons, Ltd., vol. 13(5), pages 429-436, May.
    14. Silvia Fedeli, 2022. "Francesco Forte: an economist across boundaries," Public Choice, Springer, vol. 190(3), pages 273-280, March.
    15. Kose,Ayhan & Ohnsorge,Franziska Lieselotte & Ye,Lei Sandy & Islamaj,Ergys, 2017. "Weakness in investment growth : causes, implications and policy responses," Policy Research Working Paper Series 7990, The World Bank.
    16. Asem Alshami, 2016. "Theoretical Evidences Regarding Methodologies Of Calculating Efficiency Of Public Sector," Management Strategies Journal, Constantin Brancoveanu University, vol. 34(4), pages 88-94.
    17. Daniele, SCHILIRO', 2019. "Public debt and growth in Italy:Analysis and policy proposals," MPRA Paper 97950, University Library of Munich, Germany, revised Nov 2019.
    18. Alberto F. Alesina & Roberto Perotti, 1999. "Budget Deficits and Budget Institutions," NBER Chapters, in: Fiscal Institutions and Fiscal Performance, pages 13-36, National Bureau of Economic Research, Inc.
    19. Schneider, Udo & Zerth, Jürgen, 2008. "Improving prevention compliance through appropriate incentives," MPRA Paper 8280, University Library of Munich, Germany.
    20. Alesina, Alberto & Tabellini, Guido, 1989. "External debt, capital flight and political risk," Journal of International Economics, Elsevier, vol. 27(3-4), pages 199-220, November.

    More about this item

    Keywords

    Public finance; public investments; economy; effectiveness.;
    All these keywords.

    JEL classification:

    • H12 - Public Economics - - Structure and Scope of Government - - - Crisis Management
    • H43 - Public Economics - - Publicly Provided Goods - - - Project Evaluation; Social Discount Rate
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt
    • O22 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Project Analysis

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ers:journl:v:xxiv:y:2021:i:3b:p:769-786. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Marios Agiomavritis (email available below). General contact details of provider: https://ersj.eu/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.