ECONOMETRIC ANALYSIS FOR ASSESSING
THE EFFICACY OF PUBLIC INVESTMENT (*)

R. DORFMAN
Harvard University - Cambridge, Mass. - U.S.A.

In my country and in most countries of the world the role
of government activity in the economic sphere has become
increasingly important during the last few decades. We no
longer grant even lip service to the doctrine that « That government
 is best which governs least ». Governments are
expected nowadays to intervene vigorously in economic affairs
in the interests of general prosperity and economic advancement.


A major part of this enhanced, or at least more candid,
concern with economic development on the part of govern.
ments has been an increase in the importance of governmentoperated
 enterprises and, consequently, of government invest.
ment. Today, socialist countries apart, we are all mixed
economies.

For this reason, and for a number of others about which 1
claim no particular competence, the process of deciding on
government investments has become increasingly self-conscious.
In the good old days when some local or special need or
opportunity made its appearance the legislators debated the

'*) This paper was written in conjunction with research sponsored bv
the Corps of Engineers, U.S. Army and Resources for the Future. They
are not, however, responsible for any of the opinions expressed in ©

Dorfman - pag.