Labour market characterstics - labour types and supply
Another evolution of the IFPRI base model is the introduction of an upward slopping labour supply curve. The supply of labour across the different labour type covered is thus endogenised - labour supply increases with wages through a supply elasticity.
PIO-CGE introduces features specific to project implementations with an application onto the large dam projects backed by the government:
- Construction component - project construction is added as a separate economic activity using labour, physical commodities and services reflective of the project cost components. Furthermore, the model enables the specification of the sourcing of the required inputs between domestic markets and imports.
- Financing - single- or combined alternative financing sources are enabled. Four financing options are implemented: government spending, government bonds, foreign grants and foreign loans.
- Operation - separation of project-specific rents (from project capital) from other rents (capital, labour and land). This separation enables the quantification of direct value-added resulting from project operation.
With the project implementation backed through arrangements secured by the government, the government income and expenditure accounts are central to the model development. These two accounts, while being equal to avoid public deficits, are impacted differently at each stage of the project implementation (Table \ref{475391}). At the construction phase, total project costs are included in the government expenditure. To match this spending, the government can contract grants and loans (foreign or domestic) in the financing component of the project. For loans, repayments with an applied interest would follow for a specified time period. Furthermore, preferential interests rates may be granted through resource-secured loans, notably in developing regions where access to finance is difficult. The government would thus need to acquire those resources from the domestic market (e.g. agricultural commodities, mineral resources at the domestic market price ) and to make them available for exports under the negotiated conditions (e.g. guaranteed volumes at a pre-specified price). Finally, once the project enters its operation phase, the government can receive rents from the project capital utilisation - for dam projects this would be the capital rents obtained through electricity sales throughout the lifetime of the project.