Abstract
This paper analyzes the efficiency of infrastructure provision in Italy at the execution stage, focusing on the level of government involved. Different nonparametric and parametric frontier estimates are generated to estimate an input distance function for a large sample of Italian public works in the period 2000–2005. Decentralized contracting authorities appear to be systematically less efficient in managing the execution process. These empirical findings are robust to alternative estimators and empirical strategies and suggest that decentralized authorities might lack the adequate bureaucratic structures to manage the execution stage efficiently.
Keywords
- Infrastructure provision
- Public work
- Local government
- Public procurement
- Distance function
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Notes
- 1.
However, some major issues regarding the use of asymptotic results and bootstrap remain: first, the high sensitivity of non-parametric approaches to extreme values and outliers; second, the way to allow stochastic noises in a non-parametric frontier (Simar and Wilson 2008). Another common problem is given by the dimensionality space (i.e. number of input and output variables included in the efficiency analysis) and by the reliability of the results obtained through the DEA model.
- 2.
See Simar and Wilson (2008) for technical details on the bootstrap procedures.
- 3.
See Simar and Wilson (2008) for a more detailed discussion of this point.
- 4.
For a discussion on SFA one and two-step and DEA two-stage see Schmidt (2011).
- 5.
- 6.
Private concessionaires of public infrastructures such as motorways, when acting as contracting authorities, must follow the Italian code of public contracts for works, services, and supplies (Legislative Decree No. 50/2016, and following modifications).
- 7.
This split was performed because small municipalities might not be able to exploit economies of scale and so may exhibit a lower administrative capacity when monitoring the implementation of a contract.
- 8.
- 9.
Our aim here is to assess the observed differences in efficiency per contracting authority group. We do not have a detailed discussion of these covariates, borrowing quite closely from Guccio et al. (2014a). However, we do not use the total value and the duration of works, as estimated by the contracting authority at the bidding stage, since such variables are strictly correlated with the variables used in the first stage. As an alternative, to control for complexity, we have used the classes of work values. Furthermore, we have also performed several estimates including other covariates with results substantially identical to the ones reported. All estimates are available from authors upon request.
- 10.
- 11.
We have introduced fixed time effects since the database is time truncated and it includes the contracts awarded in the period 2000–2004 and completed by 2005. Moreover, it has to be noted that the inclusion of provincial fixed effects enable us to control for different environmental and social characteristics (i.e. different levels of efficiency of the public bureaucracy, presence of criminal organizations, etc.) that in principle could affect the public work execution.
- 12.
Overall, the results of other controls are in line with literature previously reported.
- 13.
Legislative Decree n. 50/2016, and following modifications
- 14.
The qualification will be required for works above 150,000 euros.
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Guccio, C., Pignataro, G., Rizzo, I. (2019). An Assessment of the Efficiency of Decentralization in the Execution of Public Works. In: Kunizaki, M., Nakamura, K., Sugahara, K., Yanagihara, M. (eds) Advances in Local Public Economics . New Frontiers in Regional Science: Asian Perspectives, vol 37. Springer, Singapore. https://doi.org/10.1007/978-981-13-3107-7_10
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