Template-type: ReDIF-Paper 1.0
Author-Name: Zon, Adriaan van
Author-Email: vanzon@merit.unu.edu
Author-Workplace-Name: UNU-MERIT, Maastricht University
Author-Name: Wiebe, Kirsten
Author-Email: wiebe@merit.unu.edu
Author-Workplace-Name: UNU-MERIT
Title: Efficient Development Portfolio Design for Sub Saharan Africa
Abstract: We use Financial Optimum Portfolio Theory to obtain Optimum Development 
	 (Policy) Portfolios for Sub Saharan African (SSA) Countries. We estimate 
	 a model linking public expenditures on health, education and general 
	 government expenditures to the Human Development Index (HDI). Given the 
	 uncertainty of the estimated impact parameters, we obtain optimum 
	 expenditure portfolios and use them to measure the effectiveness of 
	 actual public spending. Actual HDI performance is in part due to pure 
	 chance, but significant improvements in HDI performance could be 
	 realized through the reallocation of public spending towards health and 
	 education. For some SSA countries we find that a double dividend exists, 
	 since an expansion of public expenditures may lead to both a rise in HDI 
	 performance and a fall in its corresponding variance. We also find that 
	 HDI shortfalls due to chance are uncorrelated with governance 
	 indicators, while inefficient spending and good governance are 
	 negatively correlated.
Classification-JEL: H50, I00, O20
Keywords: Human Development Index, Public spending, Optimum Portfolio Theory 
Series: UNU-MERIT Working Papers
Creation-Date: 2010
Number: 2010-050
File-URL: https://unu-merit.nl/publications/wppdf/2010/wp2010-050.pdf
File-Format: application/pdf
File-Size: 275 Kb
Handle: RePEc:unm:unumer:2010050