Herrera Dappe, Matías

Person:
Herrera Dappe, Matías

Transport Global Practice

Fields of Specialization

Infrastructure economics, Private sector participation, Performance benchmarking, Competition, Regulation, Ports, Logistics, South Asia

ORCID

0000-0002-0988-2674

External Links

ResearchGate

Departments

Transport Global Practice

Last updated: September 18, 2024

Biography

Matías Herrera Dappe is a senior economist and the global lead on transport economics and policy at the World Bank, where he leads policy research programs on infrastructure with a focus on transport. He has published extensively on a wide range of topics, including infrastructure economics, economic development, trade and logistics, public-private partnerships, state-owned enterprises, competition, auctions, and fiscal policy. Before joining the World Bank, he worked for consulting firms and think tanks, advising governments and companies in Europe, Latin America, and North America. He holds a PhD in economics from the University of Maryland, College Park.

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Publication Search Results

Now showing 1 - 10 of 25

Shrinking Economic Distance: Understanding How Markets and Places Can Lower Transport Costs in Developing Countries
(Washington, DC: World Bank, 2024-09-19) Herrera Dappe, Matías; Lebrand, Mathilde; Stokenberga, Aiga
Despite the reduction in transport costs over the past few decades, creating a single integrated economy remains elusive. Low- and middle-income countries face higher transport prices than high-income countries for both international and domestic shipments, and shipping times are longer and less reliable. Tackling the problem can increase income and general welfare in low- and middle-income countries, improving the lives of the people who live there. “Shrinking Economic Distance: Understanding How Markets and Places Can Lower Transport Costs in Developing Countries” makes a unique contribution by assessing the main determinants of shippers’ economic costs of freight transport—economic distance—and identifying the frictions that keep transport prices above an efficient level, shipping times high, and reliability low. Drawing on new analyses and compiling many others, the book provides important evidence to inform the design of policies to reduce the economic costs of transport and deepen the economic integration of developing countries. This book shows how understanding the frictions driving the economic costs of freight transport can help policy makers target reforms in the areas in which they can have the greatest impact and avoid unintended consequences. It lays out the building blocks for a reform agenda to reduce economic distance, which includes first making markets and then making places efficient. “Shrinking Economic Distance” will be of enormous value to policy makers, practitioners, and academics interested in freight transport and economic integration.
Infrastructure and Structural Change in Africa
(Published by Oxford University Press on behalf of the World Bank, 2024-03-08) Herrera Dappe, Matías; Lebrand, Mathilde
Past investments in electricity, Internet, and road infrastructure, in isolation and bundled, have contributed to structural transformation and economic development in Africa. Using new data on the expansion of the road, electricity, and Internet networks over the past two decades, the paper shows that having access to both paved roads and electricity has led to a significant reallocation of labor from agricultural to both manufacturing and services. Adding access to fast Internet has had a major impact on structural change, with an even larger impact on reallocating labor away from agriculture. The paper then uses a spatial general-equilibrium model to quantify the impacts of future regional transport investments, bundled with electricity and Internet investments, on economic development in countries in the Horn of Africa and Lake Chad region.
Off the Books: Understanding and Mitigating the Fiscal Risks of Infrastructure
(Washington, DC : World Bank, 2023) Musacchio, Aldo; Herrera Dappe, Matías; Ter-Minassian, Teresa; Foster, Vivien; Turkgulu, Burak
Developing countries face massive infrastructure needs, but public spending on infrastructure is inadequate, and public investment has been declining in recent years. Rising debt levels and tightening fiscal and monetary conditions are putting further pressure on the funds available for infrastructure, heightening the importance of increasing the efficiency of infrastructure spending. Off the Books: Understanding and Mitigating the Fiscal Risks of Infrastructure shows that however governments deliver infrastructure—through direct public provision, state-owned enterprises (SOEs), or public-private partnerships (PPPs), the risk of fiscal surprises is high in both good times and bad. As a result, infrastructure service delivery often ends up costing significantly more than expected, eroding limited fiscal space for productive spending. This book makes a unique contribution by quantifying the magnitude and prevalence of fiscal risks from electricity and transport infrastructure and identifying their root causes across a range of low- and middle-income countries. Drawing on important new sources of evidence and compiling many others, the analysis sheds light on how much is at stake in the good governance of infrastructure sectors. It allows policy makers to weigh the magnitudes of different types of risks and examine how they vary across contexts. Off the Books shows how a deeper understanding of the fiscal risks of infrastructure can help policy makers target reforms to areas where they can be expected to have the greatest impact. It lays out a reform agenda for mitigating the fiscal risks associated with infrastructure based on building government capacity; adopting integrated public investment management and integrated fiscal risk management; improving fiscal and corporate governance of SOEs; and ensuring robust PPP preparation, procurement, and contract management. The book will be of enormous value to policy makers, practitioners, and academics who have an interest in infrastructure and fiscal policy.
Off the Books: Understanding and Mitigating the Fiscal Risks of the Power Sector
(World Bank, Washington DC, 2023-05-01) Herrera Dappe, Matías; Musacchio, Aldo; Ter-Minassian, Teresa; Turkgulu, Burak
This Live Wire—based on Off the Books: Understanding and Mitigating the Fiscal Risks of Infrastructure (2023)—presents a systematic assessment of the magnitude and prevalence of fiscal risks from power investments and their root causes across a range of low- and middle-income countries. Drawing on important new sources of evidence, it shows just how much is at stake in the good governance of the power sector, how fiscal risks vary across contexts, and how they can be mitigated.
Infrastructure State-Owned Enterprises: A Tale of Inefficiency and Fiscal Dependence
(Washington, DC: World Bank, 2022-03-15) Musacchio, Aldo; Herrera Dappe, Matias; Pan, Carolina; Semikolenova, Yadviga Viktorivna; Turkgulu, Burak; Barboza, Jonathan
This paper examines the performance of infrastructure companies owned by the state, using the newly created World Bank Database of Infrastructure State-Owned Enterprises (SOEs). The data cover 19 countries and 135 SOEs between 2000 and 2018. The analysis reveals that infrastructure SOEs are large and have weak financial performance that generates significant fiscal risk. The paper introduces new measures of financial performance net of fiscal transfers and examines previously uncovered patterns of subsidies by sector. It examines the effect of state ownership by comparing the firms in the database with hundreds of comparable private firms, using coarsened exact matching. The findings show that relative to comparable private firms, infrastructure SOEs are less efficient, represent a larger share of gross domestic product, have larger liabilities as a share of gross domestic product and larger employment costs as a share of revenues, and yield lower returns on assets.
PPP Distress and Fiscal Contingent Liabilities in South Asia
(World Bank, Washington, DC, 2022-08) Herrera Dappe, Matias; Turkgulu, Burak; Melecky, Martin
Since the early 1990s, public-private partnerships (PPPs) in infrastructure provision have been expanding around the world and in South Asia. Well-structured PPPs can unleash efficiency gains in the provision of infrastructure. But PPPs create liabilities for governments, including contingent liabilities. Providing infrastructure through PPPs is preferred to public provision if the efficiency gains offset the higher cost of private financing and the unexpected public liabilities that PPPs may create. This paper attempts to assess the fiscal risks from contingent liabilities assumed by South Asian governments owing to their current stock of PPPs in infrastructure. First, it analyzes the drivers of PPP distress. Second, it simulates scenarios of fiscal risks for South Asian governments from risky PPPs. Third, it studies specific PPP contract designs and their relationship with early termination in South Asia to draw lessons for future PPP contract structuring.
Fiscal Risks from Early Termination of Public-Private Partnerships in Infrastructure
(Washington, DC: World Bank, 2022-03-15) Herrera Dappe, Matias; Turkgulu, Burak; Melecky, Martin
Public-private partnerships (PPPs) in infrastructure provision have expanded around the world since the early 1990s. Well-structured PPPs can unleash efficiency gains, but PPPs create liabilities for governments, including contingent ones. This paper assesses the fiscal risks from contingent liabilities from early termination of PPPs in a sample of developing countries. It analyzes the drivers of early termination and identifies systematic contractual, institutional, and macroeconomic factors that can help predict the probability that a PPP project will be terminated early, using a flexible parametric hazard regression. Using the probability distributions from the regression analysis, it simulates scenarios of fiscal risks for governments from early termination of PPPs in the electricity and transport sectors, adopting a value-at-risk approach. The findings indicate that the rate of early terminations decreases with direct government support, greater constraints on executive power, and the award of the PPP by subnational governments; it increases with project size and macro-financial shocks. The simulations show that fiscal risks from infrastructure PPP portfolios are not negligible in some countries, reaching as high as 2.8 percent of GDP. A severe macro-financial shock substantially increases the estimates, with the value at risk the year after the shock 11–20 times larger.
Connecting to Thrive: Challenges and Opportunities of Transport Integration in Eastern South Asia
(Washington, DC: World Bank, 2021-03-09) Herrera Dappe, Matias; Kunaka, Charles; Herrera Dappe, Matias; Kunaka, Charles; Abate, Megersa; Alam, Muneeza Mehmood; Araghi, Yashar; Coello, Barbara; de Jong, Gerard; Hatzfeldt, Gaia; Kouwenhoven, Marco; Lebrand, Mathilde; Mittal, Rachit; Pratap, Mayank; Sharma, Manish; Sieber, Niklas; Skorzus, Roman Constantin \; van Eck, Gijs; Van Patten, Diana
Because trucks in Bangladesh and India are not allowed to operate across the border, cargo is transloaded at the border, and Indian trucks traveling between northeast India and the rest of India must go around Bangladesh through the Siliguri Corridor, which significantly increases transport and trade costs. This lack of integration means that it is more costly for Bangladesh and India to trade with each other than for either of them to trade with Europe. As a result, bilateral trade represents only about 10 percent of Bangladesh’s trade and a mere 1 percent of India’s trade. This book presents a collection of innovative technical analyses that show what is needed to achieve seamless connectivity in the region. The report explores the extent to which the Bangladesh-Bhutan-India-Nepal Motor Vehicle Agreement (MVA) supports the cross-border operation of road transport services and identifies the gaps in the agreement that need to be addressed to improve its effectiveness. It assesses the potential shift of freight traffic to new routes and modes in eastern India and Bangladesh once the MVA is implemented and the potential impact of the MVA on wages, employment, and income in Bangladesh and India. It explores how the local impacts of a regional corridor could be enhanced in rural areas by improving access to markets along the corridors and how women’s participation in export-oriented agriculture value chains could be improved to allow women to take advantage of improved regional connectivity. "Connecting to Thrive" will be of interest to policy makers, private sector practitioners, and academics with an interest in regional connectivity in eastern South Asia.
Infrastructure and Structural Change in the Horn of Africa
(World Bank, Washington, DC, 2021-11) Lebrand, Mathilde; Herrera Dappe, Matias
Access to infrastructure supports economic development through both capital accumulation and structural transformation. This paper investigates the links between investments in electricity, Internet, and road infrastructure, in isolation and bundled, and economic development in the Horn of Africa, a region that includes countries with different levels of infrastructure and economic development. Using data on the expansion of the road, electricity, and Internet networks over the past two decades, it provides reduced-form estimates of the impacts of infrastructure investments on the sectoral composition of employment. Bundled infrastructure investments cause different patterns of structural transformation than isolated infrastructure investments. The impact of bundled road and electricity investments on reducing the sectoral employment share in agriculture is found to be 2.5 times larger than the impact of roads alone. The paper then uses a spatial general equilibrium model to quantify the impacts of future regional transport investments, bundled with electricity and trade facilitation measures, on economic development in countries in the Horn of Africa.
Smoke and Mirrors: Infrastructure State-Owned Enterprises and Fiscal Risks
(Washington, DC: World Bank, 2022-03-15) Musacchio, Aldo; Herrera Dappe, Matias; Pan, Carolina; Semikolenova, Yadviga Viktorivna; Turkgulu, Burak; Barboza, Jonathan
Infrastructure is critical to economic development. When infrastructure companies are owned and operated by the government, however, they create significant sources of fiscal risk. These fiscal risks can be sizable, but they are often preventable with proper planning, risk assessment, and strict rules and procedures for corporate and fiscal governance. This paper examines fiscal risk stemming from state-owned enterprises (SOEs) in the infrastructure sector in a sample of 135 firms in 19 countries from an original database of SOE financials for 2009–18. The paper develops a typology of fiscal risks and their determinants, builds new measures of fiscal injections to SOEs, and documents them using the novel database. The results show that governments support SOEs through a remarkably wide range of fiscal instruments. The fiscal cost of supporting infrastructure SOEs is usually below 1 percent of gross domestic product. Support is more prevalent and frequent than previously thought. The findings show that fiscal risk stems not only from “tail risk,” but also from the everyday operation of infrastructure SOEs. The paper calculates the Altman Z” score (a measure of default risk) and shows that it can be used to forecast the need for fiscal injections in SOEs.