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  EU financing of transport resources
D2.1.2 EU financing of transport resources GPI 30Jan09.pdf
SKEMA Policy Study EU Funds 2014-2020.pdf

GPI, AUEB

To sustain a competitive transport system, substantial investments are required that are normally associated with priority criteria. To identify priorities, a discussion of financial sources and shared responsibility between the public and private sector appears to be essential.

 

The EU investment process in transport projects relies on two main streams of capital flows – public programmes and private investment – combined together they set up the basis for public-private partnerships. If it is looked in detail, each of the streams consists of a variety of financial tools, for instance, all EU public programmes allocate resources for projects under different schemes:

 

A.    grants awarded following a call for proposals;

B.    grants awarded without a call for proposals;

C.    grants awarded by virtue of basic act for the specific programmes in the fields of- Marco Polo, TENs, Competitiveness and Innovation, Galileo and certain actions under the Seventh Framework Programme[1].


EU public investments cover the following types of projects:

  • mega projects (ports, roads, airports);
  • small and medium-sized projects (renovation of existing facilities);
  • research and development;
  • projects related to transport (communications, logistics).

In addition, private investments come mainly through different channels of the capital market to provide the necessary finance. These are:

  • loan schemes, risk facility funds, treasury products, and others;
  • off-budget sources (fees and charges);
  • various investment and infrastructure funds, pension funds.

 

The study reviews the existing financial tools in terms of:

1.     main characteristics of the programme – public or private

2.     current trends – budgets, costs of completion, etc.

3.     fiscal implications

 

It is apparent that there is a gap between investment expectations and allocated resources. Therefore collective actions from the public and private sector are needed to deal with the continuing constraints in the governmental expenditures

 

1] EU, Commission Decision COM (2008), 2014


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   Glossary Terms

 

Provision of public goods
The literature on public-private partnerships develops frameworks of how to involve the private sector in the provision of public goods. In practice, the private investments play a significant role for providing public goods. The EU Investment process demonstrates clearly this provision of public goods in the transport sector.
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Public-private partnership
Public-private partnership within the EU is a way for mutual benefits in the transport sector. Private participation contributes to the effective use of resources. Similarly, public guarantees on private initiatives improve the capacity of companies to attract long-term capital investments. It supports long-term economically advantageous infrastructure projects that could not be done purely by the commercial companies. Also it improves the capacity to develop new financing structures and technological initiatives.
http://en.wikipedia.org/wiki/Public-private_partnership
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Rational Allocation of Resources
The rational allocation of resources is an important component of the distribution process of public funds. To acquire it, infrastructure projects are usually expected to meet economic and environmental criteria of viability . Public funds are allocated through grants or financial aids for a specific project. Often two or more agents contribute to the same project for different objectives. Sometimes decision-makers have to match multiple objectives to ensure a rational allocation. In order to find a solution to this difficulty, the public authorities usually search for project selection criteria that will optimise only the public policy objective functions.
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  Additional Information for Financing transport resources
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  Transnational Corporations Journal
The Quarterly Journal of Economics, MIT Press
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