Macroeconomic Instabilities and Cost-Recovery Potentials of Public Sector Organisations

Authors

  • Samwel Alananga Sanga Department of Land Management and Valuation, School of Earth Sciences, Real Estate, Business and Informatics, Ardhi University, Tanzania

DOI:

https://doi.org/10.30564/jesr.v4i2.1359

Abstract

The 2008 financial crisis raised concerns over the performance of public sector organisations operating under different cost recovery regimes. These concerns were linked to potential failure in attaining cost recovery targets as a result of declining revenues during economic downturn. This study utilised the Linear Mixed Effect (LME) models to analyse the data from the World Bank Indicator website and from six national Land Administration Organisations (LAOs), two of which being under “No cost recovery” (NCR) and the remaining being in “Full Cost Recovery” (FCR). Cost recovery indicators were computed from financial statement of national LAOs of these countries. The findings establish that a global financial crisis that is associated with declining GDP and a higher inflation rate can insignificantly reduce the level of cost recovery for LAOs while persistent decline in GDP growth rate significantly eliminates potentials for cost recovery. However prospects for recovery can be traced within the cost-revenue microstructures of LAOs themselves. With a significantly negative relationship between spending in information and technology as a ratio of GDP to the degree of cost recovery, LAOs need only to eliminate rigidities in their cost-revenue structure which tie them to macro-instabilities of the real estate market. Such flexibility can be attained through elastic cross-substitution in the LAO’s gross cost-revenues schedules for registration tasks in favour of information delivery tasks.

Keywords:

Cost recovery; LAOs; Financial crisis; GDP; Land information products; Registration cost; LME models; Inflation rate; Public financing options

References

[1] Auerbach, A. J. (2009). Public Finance in Practice and Theory. Richard Musgrave Lecture, CESifo.

[2] Sanga, S. A. (2010). Pricing Cadastral Products under Cost Recovery Regimes. Faculty of Geo-information Science and Earth Observation. Enschede (NL): University of Twente.

[3] Productivity Commission. (2001). Cost Recovery by Government Agencies. Canberra: Ausinfo.

[4] Berbel, J., and Expósito, A. (2020). The Theory and Practice of Water Pricing and Cost Recovery in the Water Framework Directive. Water Alternatives, 13(3), 659-673.

[5] Sweya, L. N., and Wilkinson, S. (2021). Tool Development to Measure the Resilience of Water Supply Systems in Tanzania: Economic Dimension. Jàmbá: Journal of Disaster Risk Studies, 13(1), 860. https:// doi.org/10.4102/jamba.v13i1.860.

[6] Kanuti, A., Rehema Monko, R., and Alananga, S. (2019). Urban Public Toilets Management in Tanzania: Understanding Cost-effective Approaches. Macro Management and Public Policies, 1(2), 6-17, https://doi.org/10.30564/mmpp.v1i2.738.

[7] Commonwealth of Australia. (2005). Australian Government Cost Recovery Guidelines. Canberra: Department of Finance and Administration, Financial Management Group.

[8] Furlong, K. M. (2020). Full‐cost recovery = debt recovery: How Infrastructure Financing Models Lead to Overcapacity, Debt, and Disconnection. Water Wires, 8(2), https://doi.org/10.1002/wat2.1503.

[9] GINIE. (2000). Geographic Information Policies in Europe: Recommendations for Action. Sheffield: USFD, University of Sheffield.

[10] Dale, P. F. (2003). Sustainable Land Administration: Taking a Business Approach. Consortium of Blom ASA. Ljubljana: Kadaster, Registers of Scotland.

[11] UN. (2005). Land Administration in the UNECE Region: Development Trends and Main Principles UNECE Information Service. Geneva: United Nations.

[12] CEC. (2000). Commercial Exploitation of Europe’s Public Sector Information. Luxembourg: European Commission, Directorate-General for the Information Society.

[13] Van der Molen, P. (2002). Partnerships for Better Service: Public-Private and Public-Public Partnerships to Achieve Better Service to Customers in the Netherlands. United Nations Economic Commission for Europe, Working party on land administration. Vienna.

[14] Expósito, A. (2018). Irrigated Agriculture and the Cost Recovery Principle of Water Services: Assessment and Discussion of the Case of the Guadalquivir River Basin (Spain). 10(10), 1338. https://doi. org/10.3390/w10101338.

[15] Barnasconi, G., and VanderMolen, P. (2009). The Dutch Kadaster in Times of Financial Crisis. FIG Regional Conference (p. 16.). Hanoi: FIG.

[16] ADB. (2003). Special Evaluation Study of Cost Recovery in the Power Sector. Asian Development Bank, Operations Evaluation Department. Manila: ADB.

[17] IP Australia. (2010). IP Australia Cost Recovery Impact Statement. Sydney: IP Australia.

[18] Bin, G. (2009). Moderating Effects of Task Characteristics on Information Source Use: An Individual-Level Analysis of R&D Professionals in New Product Development. Journal of Information Science, 35(5), 527-547.

[19] Craglia, M. M. (2003). Access to Geographic Information: A European Perspective. URISA Journal, 15(9).

[20] Adeniyi, P. O. (2005). Information as an Economic Resource: A Response from Geo-information Perspective. UFourth Meeting of the Committee on Development Information (CODI IV). United Nations Economic and Social Council, (p. 15). Addis Ababa.

[21] Galbraith, J. K. (2008). Policy and Security Implications of the Financial Crisis: Economists for Peace and Security–Initiatives for Rethinking the Economy Seminar on Finance and Security. Paris: Foundation for Human Progress.

[22] Griffith-Jones, S., and Ocampo, J. A. (2009). The Financial Crisis and Its Impact on Developing Countries. Brasilia: UNDP.

[23] Alarcon, D., and Griffith-Jones, S. (2009). How Does the Financial Crisis Affect Developing Countries? UNDP, The International Policy Centre for Inclusive Growth. Brasilia: UNDP.

[24] Crotty, J. (2008). Structural Causes of the Global Financial Crisis: A Critical Assessment of the ‘New Financial Architecture’. Massachusetts: University of Massachusetts, Amherst Campus.

[25] Ahmad, A. (2020). Distributed energy cost recovery for a fragile utility: The case of Electricite du Liban. Utilities Policy, https://doi.org/10.1016/ j.jup.2020.101138.

[26] Akyüz, Y. (2006). Managing Financial Instability in Emerging Markets a Keynesian Perspective. 70 Years after the General Theory (p. 36). Ankara: Turkish Social Science Association, The Middle East Technical University.

[27] Arifin, K., and Hidayat, D. (2021). Cost Recovery Analysis in Production Sharing Contract in Upstream Oil and Gas Industry (Study on Gas Upstream Industries Indonesia). Dinasti International Journal of Economics, Finance and Accounting, 1(6), 1023-1047.

[28] De Vries, W. T., and Beerens, S. J. (2002). Economic, Financial and Capacity Aspects of National Geospatial Data Infrastructure. GIS@Development.

[29] Fox, J. (2002). Linear Mixed Models: Appendix to an R and S-PLUS Companion to Applied Regression. R Project.

Downloads

Issue

Vol. 4 , Iss. 2 (April 2021)

Article Type

Articles

License

Copyright and Licensing

The authors shall retain the copyright of their work but allow the Publisher to publish, copy, distribute, and convey the work.

Journal of Economic Science Research publishes accepted manuscripts under Creative Commons Attribution-NonCommercial 4.0 International License (CC BY-NC 4.0). Authors who submit their papers for publication by Journal of Economic Science Research agree to have the CC BY-NC 4.0 license applied to their work, and that anyone is allowed to reuse the article or part of it free of charge for non-commercial use. As long as you follow the license terms and original source is properly cited, anyone may copy, redistribute the material in any medium or format, remix, transform, and build upon the material.

License Policy for Reuse of Third-Party Materials

If a manuscript submitted to the journal contains the materials which are held in copyright by a third-party, authors are responsible for obtaining permissions from the copyright holder to reuse or republish any previously published figures, illustrations, charts, tables, photographs, and text excerpts, etc. When submitting a manuscript, official written proof of permission must be provided and clearly stated in the cover letter.
The editorial office of the journal has the right to reject/retract articles that reuse third-party materials without permission.

Journal Policies on Data Sharing

We encourage authors to share articles published in our journal to other data platforms, but only if it is noted that it has been published in this journal.