How to use input-output models for investment project evaluation? // T. Novikova

Prof. Tatyana S. Novikova
Novosibirsk State University and The Institute of Economics and Industrial Engineering of the Russian Academy of Science Novosibirsk, Russia



Link to the presentation file: https://ecfor.ru/publication/input-output-models-for-investment-project-evaluation/

——————————

This presentation happened 3 September 2019, Russia, Sochi at 27th Inforum Conference.

The conference & materials: https://ecfor.ru/27th-inforum-world-conference/

Playlist with the other videos from the conference: https://www.youtube.com/playlist?list=PLJBJFs8UgQgpmWWFzqw87jdwOBQXQmLfu
Inforum’s site: http://www.inforum.umd.edu/

Inforum, or Interindustry Forecasting at the University of Maryland, was founded nearly 50 years ago by Dr. Clopper Almon, now Professor Emeritus of the University. It is dedicated to improving business planning, government policy analysis, and the general understanding of the economic environment.

The host side was the Institute of Economic Forecasting of the Russian Academy of Sciences. IEF RAS specializes in fundamental, applied and exploratory scientific research in the field of analysis and forecasting of the socio-economic prospects of Russia and its regions, and the development of recommendations and proposals with a goal to improve the quality of economic policy in Russia. The site is https://ecfor.ru.

——————————

Notes:

Presentation overview

1. Introduction
2. Themodeling system
3. The model of investment project
4. Results for the project of Eastern Siberia–Pacific Ocean-2
5. Conclusions

Financial efficiency considers benefits and costs from the point of view of private project’s participants.

Economic efficiency considers project’s benefits and costs from the point of view of region or society as a whole.

Results of evaluation for the project of Eastern Siberia–Pacific Ocean-2
The goal is to increase Russia’s presence in the APO oil market. The construction of the pipeline stimulates the development of new oil fields and an increase in oil production in the regions that act as a resource base for the pipeline, which contributes to the development of the oil and gas industry and the growth of the welfare of the regions and the country.

Conclusions

1. Modern scientific and technological development requires a significant change in the appraisal of infrastructure projects, taking into account the increasing interdependence of participants both within and beyond the institutional frameworks of such projects.
2. The modeling system of three interrelated models (IOMOM, project FEM, and EMD) showed the efficiency of the integrated approach as a tool for evaluating the projects efficiency.
3. Models and methods of the simultaneous evaluation of financial and economic efficiency with presentation of the results of different economic effects and types of GS were tested for real infrastructure ESPO-2 project and innovative projects of the Siberian Branch of the Russian Academy of Science.

Model complex changes

To conduct a marketing analysis of the project, a third, econometric model for the analysis and forecast of oil consumption in the proposed international sales markets has been developed.

The sequence of calculations for OMMM has been changed, in which the model is considered as the initial model taking into account the project, and to obtain the model without taking into account the project, OMMM is adjusted. FEMP was modified due to the need to build it for an existing enterprise and the availability of source data.

Results of government support of investment projects:

Calculations of financial efficiency were carried out for the initial situation without budgetary financing and for the situation with granting of budgetary financing. In both projects 40% of investments are financed from the budget. Economic efficiency remains invariant when financing change.

It allows raising significantly the financial NPVs:

in the innovative multilateral project by 1.4 times,
in the innovative specialized project by 1.2 times,
in the infrastructure project by 1.9 times,
in the fuel project by 1.96 times.

It allows to conclude that budgetary financing creates sufficient stimulus for private participants in realization of all projects.