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Unformatted text preview: nd the Caribbean (LAC) have announced 136
stimulus packages that commit governments to increase spending on public works. The programs range in size from 0.4 percent to 1.6 percent of each country’s Gross Domestic Product (GDP). Extrapolating these commitments to the region as a whole suggests that governments in the region plan to invest approximately an additional US$25 billion in 2009 in public works—which is about 20 percent 137
beyond the originally planned budget allocations. This represents an additional 0.5 to 1.0 percent of *LCR Crisis Briefs Series. 136 Public Works, in this case, mainly refers to infrastructure investments in transport, energy, and water and sanitation but may also include public housing and public edifices such as schools and hospitals. The division of expenditure expected among categories and sub‐sectors is still unclear in many of the pronouncements. 137 While the authors have used UNECLAC, IMF and country‐level public expenditure data to attempt to verify the additionality of the stimulus announcements over originally budgeted expenditures, it remains to be seen whether fiscal, political and disbursement constraints will allow for these resources to be mobilized in the months to come. Also, the stated stimulus plans vary in degree of specificity and clarity as to timing, resourcing and additionality. The extrapolation to the region is based on the average levels of stated public works stimulus for 9 countries in LAC including the region’s 5 largest economies covering 80% of LAC’s GDP. 108 GDP in commitments in public works, raising public capital spending levels to somewhere between 3.0 138
to 4.0 percent of GDP for the region as a whole. (See Annex 1 for details.) The stimulus packages are comprised mainly of public works. Although some of the programs may include investments in public housing and edifices, to date the majority of the projects and programs announced focus on the core infrastructure sectors of transport, water and sanitation, and energy. While discussions continue about the effects of these investments on short‐term aggregate demand, the 139
employment generation potential of these investments remains a central feature . This is particularly important as LAC’s unemployment levels rise in the face of the growing crisis. This note provides a 140
preliminary estimate of the employment generation potential for different types of infrastructure investments as per the LAC stimulus packages. The Impact of Infrastructure Investment on Short‐Term Employment Generation The most comprehensive way to calculate the labor impacts of a single infrastructure investment or 141
program is to consider three levels of employment generation stemming from the investment : •
• Primary Impact: Those directly employed on site to undertake the task at hand; Secondary Impact: Those indirectly employed in the manufacture of materials and equipment that are supplied to the initial investment; and Tertiary Impact: The induced employment generated by the direct and indirect jobs created....
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