Fourth generation (4G) road licenses: An estimate of its economic and social consequences

Abstract

This paper concerns a set of methodologies and applications, as a case study to measure the economic and social consequences of implementing fourthgeneration (4G) road licenses in Colombia. For the economic estimates, we used Leontief Multipliers derived from the Input Output Matrix which is put together for the case study of the Disaggregated Utilization Matrix in National and Imported Products reported by DANE. These multipliers allow the estimation of the projects’ contribution to economic growth. The social effect is analyzed using the Monetary Poverty Index and the Multidimensional Poverty Index using the information reported in the Large Integrated Household Survey. As a case study for the application of the methodology, the Santana–Puerto Salgar corridor located in Colombia is used. The results generated by the Leontief Multipliers allow us to calculate that for each COP$1.0 invested in the 4G concessions, COP$2.52 is generated in gross terms and COP$1.52 in net terms. This multiplicative effect generates a contribution to the national GDP growth of 0.27%, 0.17% and 0.01% for the years 2018, 2019 and 2020 respectively, during the construction phase, and 0.04% per year between 2022 and 2024 during the operation stage. The social impact is quantified through the reduction of the number of poor people in the affected departments; a reduction of the Monetary Poverty Index is expected from 32.1% to 23.2% during the construction and operation phase, and a reduction from 12.4% to 10.2% of the Multidimensional Poverty Index for the same period.