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 go- 
vernment is best which governs least ». Governments are 
expected nowadays to intervene vigorously in economic affairs 
in the interests of general prosperity and economic advance- 
ment. 
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 government- 
operated 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.