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The paper benefited from comments and suggestions by Racheeda Boukezia (FAD), Jose Diaz Sanchez, Ali Souag, and Fulbert Tchana Tchana (all World Bank).
Adjusted for purchasing power parity.
The Human Development Index (HDI) is a summary measure of average achievement in key dimensions of human development: a long and healthy life, being knowledgeable, and have a decent standard of living (United Nations Development Programme).
Algeria’s proven hydrocarbon reserves (excluding shale oil and gas) are projected to be exhausted in 1–2 generations’ time.
The paper uses several survey-based indicators, which are not produced by Algeria’s statistical office. Caution is needed when comparing the indicators across countries. Although they are updated yearly and survey methodologies are revised frequently, they are partly constrained by the data that can realistically be collected and are based on perceptions. The worldwide governance project reports aggregate and individual governance indicators for over 200 countries and territories over the period 1996–2017, for six dimensions of governance, including control of corruption. They are based on a mix of quantitative measures and survey-based indicators. The World Economic Forum’s Global Competitiveness report includes several indicators on the quality of institution, which are based on executive opinion surveys.
The ICOR is computed as the ratio of public investment to the change in nonhydrocarbon GDP.
The efficiency of public investment efficiency in Algeria can be assessed using efficiency frontier analysis. Albino- War and others (2014) use efficiency frontier analysis to assign investment efficiency scores to individual countries. The investment efficiency score reflects how far a country is from the frontier determined by the best performers. Efficiency is measured in terms of both the quality (using the infrastructure sub-component of the global competitiveness indicator of the World Economic Forum as described in paragraph 11 and the quantity (measured as an index of physical infrastructure) of infrastructure.
Cost estimates are based on project-level data from Reuters Zawya’s database, which contains data on construction project life cycles in MENA. Following earlier studies (e.g., Alexeeva and others (2011), Flyvbjerg (2008), and Fox (2000)), we compare countries’ median per-kilometer of roads and metro projects using the final contracted cost for each project.
Available data cover 2011–17. The included road construction projects are in Algeria (10), Bahrain (19), Egypt (35), Morocco (30), Oman (90), Saudi Arabia (406), Tunisia (6), and the United Arab Emirates (56).
Data covers projects in Algeria (1), Kuwait (1), Qatar (4), Saudi Arabia (4), and the United Arab Emirates (4).
The large metro construction costs in Algeria may be partly explained by technical complexities due to underground components. An important qualifier to the comparison with the United States is that this calculation does not control for the cost of land or for different costs of raw materials—such as those needed to reinforce underground structures— which Algeria must import at an additional expense.
Delays in project completion are measured by the percent difference between contract and actual durations.
Cost overruns are measured by the percent difference between initial and final budget authorizations.
Flyvbjerg, Skamris, and Buhl (2008) find that the average cost overrun for metro investment projects—which typically incur larger cost overruns than other types of infrastructure projects—is about 65 percent in countries outside Europe and North America Metro projects.
The first public investment program (“Plan de Soutien à la Relance Économique”, PSRE) was implemented during 2001–04. The second (“Plan Complémentaire de Soutien à la Croissance”, PCSC) was implemented during 2005–09. They involved budget authorizations equivalent to 43 percent of 2004 GDP and 140 percent of 2009 GDP, respectively.
Public investment projects funded from the central government’s budget are classified into two types. The centralized sector investment programs, particularly for economic infrastructure, are managed centrally by line ministries or public agencies with financial autonomy. The deconcentrated investment programs, particularly in social infrastructure, are managed at the wilaya level, but remain under the concurrent responsibility of the relevant line ministry. Local governments also implement some investment projects upon delegation of the Prefect.
CNED is an autonomous public establishment of industrial or commercial nature created by Decree 04–162 of June 5, 2004. It is governed by a board chaired by the minister of finance and comprising four other ministers in addition to the minister directly concerned with the issue under discussion, as well as individuals selected for their competence and credibility.
Line ministries are responsible for project preparation. This includes identifying projects to support the government’s strategy, undertaking prefeasibility, and feasibility studies. CNED is expected to ascertain the consistency of the proposed project with the sector, and in its appraisal of investment projects, CNED calls on experts outside the central administration.
The conditions are detailed in article 49 of the decree. For example, mutual arrangements can be awarded in the case of serious and imminent threat to public assets or public order.
See 2017 Article IV report (Country Report No. 17/141).
The survey covers PIM practices across a sample of 25 countries, including Algeria. The responses from country authorities were validated by IMF country Desks and the Fiscal Affairs department. More details can be found in IMF (2015).
Algeria would benefit from a Public Investment Management Assessment (PIMA)—the IMF’s new tool that provides a comprehensive assessment of PIM practices and weaknesses of the public investment processes. To date, 30 assessments were performed, including for Tunisia and Morocco. For more details, see IMF (2018a).
As a technical body, CNED has no authority to review the sectoral strategies themselves. The formulation of sector strategies is the core responsibility of the concerned ministries, in theory, in consultation with each other and the Ministry of Finance, and they must be approved at the highest levels of government.
We assume countries with similar old-age and youth dependency ratios have similar needs in terms of health and education.
Government effectiveness captures perceptions of the quality of public services, the quality of the civil service and the degree of its independence from political pressures, the quality of policy formulation and implementation, and the credibility of the government’s commitment to such policies (Worldwide Governance Indicators).
TIMSS is the Trends in International Mathematics and Science Study, which is an assessment done by the International Association for the Evaluation of Educational Achievement. TIMSS assesses 4th and 8th grade students from a diverse set of educational systems (countries or regional jurisdictions of countries) in terms of economic development, geographical location, and population size. In each of the participating educational systems, a minimum of 4,500 to 5,000 students is evaluated. PISA is the Programme for International Student Assessment carried out by the OECD. It is a triennial international survey which aims to evaluate education systems worldwide by testing the skills and knowledge of 15-year-old students. Country participation in both of these assessments is voluntary.
The fact that the financial sector differs is consistent with previous findings (Clements and others, 2010).
Structural indicators include product market regulations and competition, labor market efficiency, trade openness, and financial market functioning.