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General equilibrium impact evaluation of road sector investment programs in Ghana

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  • Jensen, Henning Tarp

Abstract

This study introduces an integrated economy-wide simulation framework for evaluation of capital road works for existing roads and highways, which formalizes transmission mechanisms and captures important static and dynamic spillover effects, and thereby allows for measurement of lifetime net benefits. The current CGE-RONET model framework bridges the gap between partial equilibrium simulation models in the engineering tradition (with a focus on “first order” effects), and general equilibrium simulation models in the economics tradition (with a focus on socioeconomic spillover effects), and thereby attempts to capture the main transmission mechanism between capital road works, road degradation, vehicle operating costs (VOC), transport sector productivity, and socioeconomic outcome variables. The study addresses several issues including project vs. program evaluation, explicit specification of transmission mechanism(s), distinction between new construction and other capital road works, and measurement of lifetime net benefits as a function of road degradation and planned future sequences of capital road works. The CGERONET model integrates the Road Network Evaluation Tools (RONET) transport model within a dynamically-recursive Computable General Equilibrium (CGE) model of the 1-2-3 type. It is calibrated on the basis of a 2004 Ghana SAM (Jensen, van den Andel & Duncan 2008). The analysis suggests that the planned future sequence of capital road works is crucial for (evaluating) the impact of current capital road works; Dynamic effects may account for >95 percent of the total GDP impact; Socioeconomic spillover effects may account for half of the total GDP impact. It is therefore crucial to account for dynamic and spillover effects when evaluating the global impact of capital road works. This rules out ex post methodologies, including the treatment-effect method, which cannot account for socioeconomic spillover effects or dynamic effects (in a timely fashion).

Suggested Citation

  • Jensen, Henning Tarp, 2009. "General equilibrium impact evaluation of road sector investment programs in Ghana," Conference papers 331858, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    • Handle: RePEc:ags:pugtwp:331858
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