nep-ppm New Economics Papers
on Project, Program and Portfolio Management
Issue of 2019‒11‒04
eight papers chosen by
Arvi Kuura
Tartu Ülikool

  1. Credit Attribution and Collaborative Work By Saltuk Özerturk; Huseyin Yildirim
  2. Under/Over-Investment and Early Renegotiation in Public-Private Partnerships By Daniel Danau; Annalisa Vinella
  3. Funding Economic Development and the Role of National Development Banks-The Case of Cyprus By Helen Kavvadia; Savvakis C. Savvides
  4. Explaining low economic return on road investments. New evidence from Norway By Halse, Askill Harkjerr; Fridstrøm, Lasse
  5. Evaluating water- and health related development projects: A cross-project and micro-based approach By Christina Greßer; David Stadelmann
  6. What Is “Country Ownership†? A Formal Exploration of the Aid Relationship By What Is “Country Ownership†? A Formal Exploration of the Aid Relationship
  7. A shot in the dark? Policy influence on cluster networks By Holger Graf; Tom Broekel
  8. Strong codetermination - stable companies: An empirical analysis in lights of the recent financial crisis By Rapp, Marc Steffen; Michael, Wolf

  1. By: Saltuk Özerturk (Southern Methodist University); Huseyin Yildirim (Duke University)
    Abstract: We examine a dynamic model of teamwork in which the public attributes credit for success based on its perception of individual efforts. The collaborative behavior varies starkly depending on the shape of marginal effort cost, or project's "difficulty." In the unique (interior) equilibrium, higher ability collaborators work less and thus receive lower credit and payoff for "easy" projects, while the reverse holds for "difficult" projects. Despite free-riding, the team equilibrium may involve over-investment. Social efficiency requires over-rewarding collaborative work and under-rewarding solo work. The incentives to team up and the impact of effort monitoring on credit attribution are also investigated.
    Keywords: Teamwork, Collaboration, Credit, Project Difficulty.
    JEL: D81 D86 H41 L23
    Date: 2019–11
  2. By: Daniel Danau; Annalisa Vinella
    Abstract: We consider a public-private partnership in an infrastructure project, which requires specialised expertise during the construction stage for the infrastructure to operationalise. This entails that, after an investment is made to begin building the infrastructure, its construction is completed at a cost, which increases with the investment at an increasing rate, and is higher if the government replaces the firm beforehand. The likelihood of a lower operating cost increases as well with the initial investment. Once the infrastructure is in place, the firm manages it, taking advantage of the (usual) synergy between construction and operation. Given the characteristics of the project, the firm has an incentive to either under-invest or over-invest in early construction, seeking a renegotiation thereafter. We show that, in a renegotiation-proof contract, the marginal cost of the investment facing the government is either above or below the marginal “technological” cost of the investment, at optimum. Accordingly, the resulting investment - although enhanced - is either below or above the efficient level. The contractual payoff of the firm is above its renegotiation payoff in the former case, below in the latter. We further show that when the firm holds private information on the operating conditions, the government may welcome a contractual renegotiation either as a way of containing (avoiding) the distortions due to the informational gap, or as a tool to pass the cost of construction completion onto the firm, or both.
    Keywords: public-private partnerships, asset specificity, hold-up, over/under-investment, renegotiation
    JEL: D82 H57 H81
    Date: 2019
  3. By: Helen Kavvadia (Visiting Research Associate, Identités. Politiques, Sociétés, Espaces (IPSE), University of Luxembourg, Luxembourg); Savvakis C. Savvides (Visiting Lecturer, John Deutsch Institute for the Study of Economic Policy, Queen’s University, Canada)
    Abstract: The paper draws on previous research on the role of Multilateral Development Banks (MDBs), Regional Development Banks (RDBs) and National Development Banks (NDBs). It examines the role of the Cyprus Development Bank (CDB), prior its privatisation in 2008, in the economic development of the country and, specifically, its intermediation of international finance from multilateral and regional development banks. Currently, this function is undertaken by the commercial banks, which are however limited by a balance sheet fatigue, resulting from the excessive levels of private debt, as shown in this paper. Moreover, the commercial banks lack necessary elements in successfully executing this key role. They do not have the professional competence as well as the discipline and culture for executing such a highly demanding role in the economy. Last but not least, and judging from the experience of the CDB it is imperative to have a totally independent and competent financing institution, which will lead by example. Further to the analysis of the current macroeconomic and institutional context in Cyprus, there is a void of institutional capacity to fund projects and offer valuable advice to state and private decision-making bodies on decisive development projects. This paper recommends the establishment of an NDB or a National Development Finance Agency (NDFA), and proposes an appropriate model.
    Keywords: National Development Banks, International Finance, Regional Development Banks, Multilateral Development Banks
    JEL: F45
    Date: 2019–09
  4. By: Halse, Askill Harkjerr; Fridstrøm, Lasse
    Abstract: Is regional policy to blame for the negative economic return on many road projects, or can road investments give value for money also in remote areas? In Norway, a large majority of planned road projects have negative net benefits according to cost-benefit analysis (CBA). In this paper, we point at geographic characteristics that can explain this, comparing Norway with its neighbors Sweden and Denmark. We then show econometric evidence that such factors also explain a substantial part of the variation in the benefit-cost ratio within Norway. Projects in areas that are far from the largest cities or have difficult topography have lower net benefits. This implies that there is a trade-off between economic efficiency and investing in roads in rural areas with difficult topography. We also discuss the role of road design requirements, decision-making processes and the electoral system for road investment policy.
    Keywords: Cost-benefit analysis, road investments, regional policy, distributive politics
    JEL: D61 D7 D72 R42
    Date: 2019–01–04
  5. By: Christina Greßer; David Stadelmann
    Abstract: We present a new micro-based approach to evaluate the effect of water- and health-related development projects. We collect information from 1.8 million individuals from DHS clusters (Demographic and Health Surveys) in 38 developing economies between 1986 and 2017. By geocodes, we combine cluster information with over 14,000 sub-national projects from the World Bank. We then investigate the impact of the projects employing fixed-effects estimation techniques. Our findings indicate that the time to gather water and child mortality tend to decrease when projects are realized. The quality of drinking water and sanitation facilities are positively affected too by projects. Our data allows us to account for cluster heterogeneity, which is a significant extension to the cross-country literature. Robustness checks, covering data and methodological refinements, supports our main findings.
    Keywords: Evaluation; development projects; drinking water; sanitation; child mortality
    JEL: O10 O22 R11
    Date: 2019–10
  6. By: What Is “Country Ownership†? A Formal Exploration of the Aid Relationship (Center for Global Development)
    Abstract: The aid literature and high-level accords like the Paris Declaration argue that “country ownership†is critical to the effectiveness of aid. In response, donors and recipients renamed themselves “development partners,†obscuring the tendency for country ownership benefits (i.e. more successful and sustainable programs) to come at the expense of satisfying the funding countries’ priorities. This paper illustrates the tradeoff between country ownership and funders’ priorities with a formal model in which aid is governed by a contract to produce a jointly desired outcome. The model generalizes the Principal-Agent approaches for studying aid which treat countries as having multiple objectives. The new model illustrates how a recipient country’s rational resource allocation choices vary with different aid contracts, whether based on lump sum payments, input-based payments, conditional payments, matching grants or outcome payments. It reveals two critical aspects of the country ownership debate. First, even when funders and recipients agree on project goals, funders can only achieve their priorities through distorting domestic allocative choices. Second, funders are likely to fully embrace country ownership only in cases where they believe alternative uses of domestic funds have integrity (as defined by the funder). The model also shows that when funders put higher priority on achieving their goals than accommodating recipient allocation preferences, they should prefer conditional payments, matching grants, or outcome payments. Among these, the donor’s preferences would depend on the relative observability of expenditures to outcomes. If instead funders embrace country ownership and seek to maximize the country’s welfare, lump sum grants are better. In terms of Paris Declaration goals of sustainability, the aid contracts which are least aligned with recipient country priorities will not be sustained after aid ends unless domestic preferences are altered by a process of hysteresis.
    Keywords: aid effectiveness, principal-agent model, pay for results, performance payments, country ownership
    JEL: D02 F35 O20
    Date: 2019–10–11
  7. By: Holger Graf (Friedrich Schiller University Jena, Economics Department); Tom Broekel (University of Stavanger, Business School, Stavanger, Norway, and Centre for Regional and Innovation Economics, University of Bremen, Germany)
    Abstract: Cluster policies are often intended and designed to promote interaction in R&D among co-located organisations, as local knowledge interactions are perceived to be underdeveloped. In contrast to the popularity of the policy measure little is known about its impact on knowledge networks, because most scientific evaluations focus on impacts at the firm level. Using the example of the BioRegio contest, we explore cluster policy effects on local patent co-application and co-invention networks observed from 1985 to 2013, in 13 German regions. We find that the initiative increases network size and innovation activities during the funding period but not afterwards. The impact of the BioRegio contest on network cohesion is moderate. In contrast, general project-based R&D subsidisation is found to support cohesion more robustly.
    Keywords: Cluster Policy, Knowledge Networks, Network Analysis, Patent Data, Regional Innovation, Policy Evaluation
    JEL: O31 Z13
    Date: 2019–10–09
  8. By: Rapp, Marc Steffen; Michael, Wolf
    Abstract: This Mitbestimmungsreport is a brief presentation of a project supported by the Hans-Böckler-Stiftung, entitled 'The effects of codetermination in the supervisory board on corporate governance'. The object of study was the role of company codetermination in German companies in relation to company performance and company decision-making during the recent financial and economic crisis. For this purpose companies with and companies without codetermination were compared. The findings show clearly that companies with codetermination not only were more robust during the financial and economic crisis, but also recovered more quickly from its consequences. The study thus underlines the potential of company codetermination for coping with the effects of external shocks, such as the financial and economic crisis.
    Date: 2019

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