This article examines the influence of New Public Management ideas on recent changes in the Portuguese central government. Its purpose is to analyse the tendency to make public organizations more autonomous and to decentralize following the example of other countries inspired by the practice of the private sector and New Public Management stressing managerial flexibility. The message it conveys is that changes were primarily guided by values of the public domain, juridicial concerns and the primacy of politics, building a public governance that emphasizes the role of politicians and opens the administrative system to the sociopolitical environment.
The terrorist attacks of September 11, 2001 have had a profound impact on American policing, requiring that police agencies substantially modify various elements of their policies, operations, and training. This article examines several types of changes local American police agencies will have to implement if they are to effectively meet the challenges of preventing, deterring, responding to, and investigating terrorist acts. Police agencies face a compelling need for more sophisticated intelligence gathering and analysis, as well as better dissemination of terrorism intelligence among local, state and federal agencies. There is also the need for more sophisticated operational policies with regard to terrorism response, greater cooperation and sharing of resources among local public safety agencies, and more comprehensive training that educates police officers to the realities of contemporary terrorist methods and activities. Finally, the need for effective investigation and prosecution of terrorist acts demands that agencies ignore or overcome the traditional organizational boundaries and rivalries that impede the achievement of these and other goals. The article also points some of the difficulties involved in implementing the necessary changes within a highly decentralized system of thousands of relatively autonomous local agencies, and it illuminates some of the initiatives undertaken by the New York Police Department (NYPD) to overcome these obstacles and more effectively prepare for the terrorist threat.
Zero-knowledge proofs are proofs that are both convincing and yet yield nothing beyond the validity of the assertion being proven. Since their introduction about twenty years ago, zero-knowledge proofs have attracted a lot of attention and have, in turn, contributed to the development of other areas of cryptography and complexity theory.
A 4-round zero-knowledge interactive proof system for NP (Non-deterministic Polynomial) is presented when assuming the existence of one-way permutations and collision-free hash functions. This construction is more efficient than the original construction of 5-round zero-knowledge proof system for NP. The critical tools used in this paper are: zap, hash-based commitment scheme and non-interactive zero-knowledge.
Abstract. We introduce the notion of a dynamic accumulator. Anaccumulator scheme allows one to hash a large set of inputs into one short value, such that there is a short proof that a given input was incorporated into this value. A dynamic accumulator allows one to dynamically add and delete a value, such that the cost of an add or delete is independent of the number of accumulated values. We provide a construction of a dynamic accumulator and an efficient zero-knowledge proof of knowledge of an accumulated value. We prove their security under the strong RSA assumption. We then show that our construction of dynamic accumulators enables efficient revocation of anonymous credentials, and membership revocation for recent group signature and identity escrow schemes.
Carlos Eduardo Frickmann Young, Carlos A. Roncisvalle
The objective of this study is to examine the evolution and characteristics of the financing for the nvironment in Brazil, in order to identify the advances and retreats after the Rio 92 Conference. Brazil has a very decentralized administration, composed of three independent levels of public administration: the federal government, 27 state governments, and more than 5000 municipios, " or municipalities; all of them with specific environmental institutions. However, at the time of the completion of this report, there were no indicators that aggregate information from these different institutional levels for the 1992-2001 period.(1) Thus, this study was a first effort to generate this kind of figures. Given the very short time for its completion, the main priority was to identify the resource flows from the federal government and some selected states. Efforts to estimate spending on pollution control and other environmental activities by the private sector were also made. In addition, the issue of funding sources is also discussed. Despite many methodological problems involved in the elaboration of these indicators, it was possible to identify trends and conclusions for environmental spending. At the federal government level, it was estimated that environmental expenditures were between 0.4% and 1% of the federal spending. Another important finding was that, although there was an official commitment to increase efforts in this area after the Rio 92 Conference, the overall federal government expenditures in environmental issues did not increase during the 1993-2000 period. Moreover, a matter of concern was the declining quality of this spending, with fewer resources directed to end-activities and more money diverted to means-expenditures. An important cause of this was the increasing share of debt related expenditures (interests and amortization) in the total budget. On the other hand, investments suffered cutbacks, particularly in the more recent period, and the expenditures in personnel fell systematically by 25% in constant prices during the second half of the nineties. Environmental projects are the most important single element in international cooperation agreements. However, the flow of foreign resources presented a declining trend since 1994, oscillating between 6% and 17% of total expenditures. Most of these resources come from external credit operations (loans), which means that in the long term, they represent an extra pressure of financial expenses in the budget. The proportion of international donations/total expenditures in 2000 fell to the lowest level in the series (2.0%), clearly indicating the decline of international support for environmental projects in Brazil. Results for the 1996-98 period show that, if sanitation costs are included (an overestimate since it also considers water supply), environmental expenditures are relatively more important for local governments: around 9% of the total public spending in the sample of municipios considered. State governments are in the second position, spending around 1.5% of their budget on environmental issues, in contrast to the less than 1% of the federal government. For this reason, there remains a clear need to generate better aggregate figures for the states and municipios for the whole period. The methodologies used for public budgeting and expenditure control vary widely, making it very hard to supply compatible aggregate numbers. In the three states where longer time series were estimated (São Paulo, Paraná and Rio Grande do Sul), there was no consistent trend of increasing expenditures on environmental objectives. Another gap that needs to be fulfilled refers to the private sector environmental spending. There were positive signals which indicated that the private sector is getting more concerned with the environmental issues, particularly those agents that have interests/responsibilities at the international level. It was calculated that the environmental spending of the industry sector was around R$ 160 million per year, slightly less than 1% of its value added. Although it is expected that this number will increase in the future, it is considerably lower than the public sector spending on environmental issues. It is very difficult to aggregate all these figures, but assuming for the year 2000 that the public spending on environmental issues was of 1.5% of the total, the public environmental spending would be of 0.33% of GDP, and an annual expenditure per capita of R$ 22.9 per capita (US$ 9.2 per capita). If the estimated industrial environmental spending (R$ 160 million) is added, the total spending becomes R$ 4.1 billion (0.34% of GDP), or R$ 23.9 per capita (US$ 9.6 per capita). Most of the funding for environmental projects comes from the government (mainly federal, through BNDES), international development agencies, or from companies' own resources. The private financial sector has a minor role on the financing of environmental expenditures but, gain, there are signals of positive changes, with the creation of innovative private funds specialized in environmentally friendly projects that combine financial and "green" interests as an example. The consolidation of economic instruments in international environmental agreements, particularly the Kyoto Protocol on greenhouse gases emissions, may accelerate this new financial market. Another potential source of funding for environmental projects is connected to the implementation of economic instruments in the environmental management system. Command-andcontrol procedures, such as licensing and emission standards, largely dominate the environmental regulation in Brazil. However, some interesting experiences, such as the "green" tax rebound (ICMS verde) and the recent changes in the water resources policy adopting the user/polluter-pays principle, indicate that the role of economic instruments will increase and, consequently, that there is potential for developing self-sustained financial mechanisms to sponsor environmental expenditures. (1) After the completion of this research, the Brazilian Institute of Geography and Statistics (IBGE) published estimates of public spending for the 1996-98 period (IBGE 2001). Whenever relevant, these figures were also added to the analysis, but with an alert that they were obtained using different methodological procedures."
We construct 2-round (i.e., 2-message), public-coin, black-box (concurrent) zero-knowledge proof systems and arguments for any language in NP under the assumption that the prover is resource-bounded during the execution of the protocol.
Fernando Filgueira, Herman Kamil, Fernando Lorenzo, Juan Andrés Moraes · 5 authors
This paper analyzes the reasons behind Central Government (CG) bailouts of Subnational Governments (SNGs) in the case of Uruguay. We argued that Uruguay represents a good example of the risks of fiscal decentralization, in the context of adjustment policies, and when SNGs` responsibilities and resources have not been carefully defined. We show that, in unitary countries where SNGs lack the opportunities to misbehave that they have in federal countries (e. g. , public debt issuance, international borrowing), SNG officials find ways to finance deficits through non-compliance with politically contestable obligations. In particular, SNGs in Uruguay finance their deficits by accumulating debts with other government agencies and obtaining discretionary transfers from the CG. Through statistical analyses we show that debts and deficits are mainly related to vertical fiscal imbalances and economic conditions in the SN jurisdictions. Yet, the analysis of recent bailout episodes suggests that institutions and political factors play a role (i. e. , they are important ex-post factors). This implies that bailouts have been more than simple compensations for structural imbalances, thus creating opportunities for strategic behavior on the part of SNG authorities (partly confirmed by the disparate fiscal performance of Montevideo vis-à-vis the rest of the country).
We analyze Georgian education finance and show that it is embedded in the overall structure of Georgian rayon finances, reflecting all their weaknesses: inequalities, lack of transparency, unmanageability, room for corruption. The budgetary and political independence of rayons is very limited. The steep fiscal inequalities between rayons are only partially and ineffectively addressed by the system of transfers. The transfers moreover are heavily negotiated and non-transparent. Thus education finances depend on general income of the rayons, which effectively determines the level of financing. At the same time, however, the role of the rayons in the management of the sector is very limited. The actual spending patterns for Georgian general education schools are very closely related to per capita income of the rayons without the transfers (about 75% of education spending), and to student teacher ratio (about 25% of education spending). The dependence of the education system on rayon wealth is our main empirical finding, and it contradicts widespread belief among Georgian education professionals. It is not surprising therefore that the education sector in poorer and in mountainous rayons with very low student teacher ratio has to adapt to this situation. It responds by reducing the number of teachers per class, thus lowering standards of service delivery despite high per student costs. The first step required to change this situation is to increase budgetary independence and education management role of rayons. Without strong local governments it will not be possible to decentralize Georgian education. Moreover the influence of fiscal inequalities on education finance should be broken by taking it out of general rayon income and by basing it on a per student education grant to rayons (education subvention). This would lead to significant redistribution of public funds in Georgia. Such a move needs to be carefully prepared. It is necessary to subject education subvention to buffer mechanisms, in order to protect rayons from drastic changes to their present education spending patterns. Moreover, Georgia should begin thinking about a per student formula for education subvention, which recognizes unavoidable higher per student costs of providing education in different geographical and social settings.
We consider the problem of constructing Concurrent Zero Knowledge Proofs [6], in which the fascinating and useful "zero knowledge" property is guaranteed even in situations where multiple concurrent proof sessions are executed with many colluding dishonest verifiers. Canetti et al. [3] show that blackbox concurrent zero knowledge proofs for non-trivial languages require #4 k) rounds where k is the security parameter. Till now the best known upper bound on the number of rounds for NP languages was #(log k), due to Kilian and Petrank [16]. We establish an upper bound of #(log k) on the number of rounds for NP languages, thereby closing the gap between the upper and lower bounds, up to a #(log log k) factor.
This article is concerned with an analytical summary of how the Japanese container ports have been taking place overcapacity problem in a systematic way. It focuses on institutional aspects of the overcapacity problem from the viewpoint of accounting cost and opportunity cost. The first issue arises due to the port authority's accounting system and insufficient disclosures of financial statements of port business to the port users and taxpayers. The second issue is inherently related to resource allocation between the state government and local governments through the budget system and income distribution programmes. Since a proper allocation of economic resources in the port sector as a whole will depend on investment decisions being taken within a coherent framework for ensuring that costs are passed on to port users, these issues are closely related to each other in reality. Although the budget system is completely controlled by the state government, the local governments have authoritative power over port planning, financing, and management, which is assured by the Ports and Harbours Law. The overcapacity problem appears to be an inevitable result.
We consider the situation of a physical entity that is the compound entity consisting of two ‘separated ’ quantum entities. In earlier work it has been proved by one of the authors that such a physical entity cannot be described by standard quantum mechanics. More precisely, it was shown that two of the axioms of traditional quantum axiomatics are at the origin of the impossibility for standard quantum mechanics to describe this type of compound entity. One of these axioms is equivalent with the superposition principle, which means that separated quantum entities put the linearity of quantum mechanics at stake. We analyze the conceptual steps that are involved in this proof, and expose the necessary material of quantum axiomatics to be able to understand the argument. 1
China’s economic reform over the past two decades has decentralized various decision rights from the central government to local governments, including the control rights of enterprises. We develop two opposing hypotheses on how governments influence the allocation of human capital in listed companies in the process of decentralization. A positive view suggests that local governments, with enhanced profit incentives and competitive pressure among jurisdictions, promote efficiency in firms and markets, resulting in more professionally managed companies. An alternative view conjectures that local governments, subject to conflicts of interest with the central government, regulate firms and markets for their private interests, resulting in a lack of professionalism and fragmented markets. We present new data on the boards of directors of 621 companies that went public during 1993 through 2000 in China. We report that over 30 percent of the directors are affiliated with various layers of governmental agencies. The presence of politicians, especially those affiliated with local governments, is associated with fewer directors possessing business experience or expertise in law, accounting, or finance, fewer academician directors, and fewer directors from non-local administrative regions. Low education levels, few woman directors, and high director seniority also characterize boards populated with local politicians. The overall evidence is inconsistent with the positive view, but supports the agency view of government decentralization.
Fiscal decentralization reform, the reform of fiscal relations between different levels of government, is an important fiscal policy issue in many African countries. While for many African nations the decentralized delivery of government goods and services is a relatively new concept, the issue of intergovernmental fiscal relations has been a constant and important fiscal policy consideration in Nigeria since the country's independence in 1960. Despite Nigeria's long history with a federal government structure, until recently it was hard to truly consider Nigeria as an effectively decentralized country. For much of the country's history, successive military regimes dismissed elected officials and legislative bodies at all levels of government and replaced them with military appointees; since under military rule subnational governments in Nigeria were accountable to the country's military authorities rather than to state or local electorates, we cannot properly speak of political and fiscal decentralization during this period. Nonetheless, in many respects Nigeria's basic decentralized federal administrative structure was maintained by successive military regimes. Under military rule, state and local governments continued to operate as distinct government units, provide important government services, collecting own source revenues and receiving intergovernmental transfers, albeit at the direction of military governors and appointed local executives rather than at the discretion of the local electorate. However, with the return of civilian rule to Nigeria in 1999, which entailed the adoption of a new constitution and the election of government officials and legislative assemblies at all levels of government, Nigeria instantaneously became one of the most decentralized countries in Africa.To this effect, this paper presents a broad overview of intergovernmental fiscal relations in Nigeria. This paper follows the main conceptual building blocks or pillars of fiscal decentralization and subnational publc finance. After a brief overview of Nigeria's federal system, Section 2 discusses the assignment of functional responsibilities in Nigeria's federal system. Section 3 presents an analysis of revenue assignments, considering what revenue sources are available to each level of government. Section 4 looks at the design and implementation of Nigeria's system of intergovernmental transfers. Section 5 considers subnational fiscal management issues, including the importance of capital "development" budgets in the Nigerian budget process. Finally, Section 6 considers the role and status of local governments and state-local government relations.
Goldreich and Krawczyk proved that there do not exist 3-round black-box zero-knowledge proofs or arguments for languages outside BPP. In 1998, Hada and Tanaka used non-standard assumptions to provide a 3-round zero-knowledge argument for every language in NP which was not black-box zero-knowledge. We present a non-black-box simulatable 3-round zero-knowledge proof system for NP, which is secure even when the prover has unbounded computational resources. However, we require a non-standard assumption (similar to those used by Hada and Tanaka) in order to prove our protocol is zero-knowledge. Additionally, we provide a proof of knowledge framework in which to view this type of non-standard assumption. In this thesis, I designed and implemented a compiler which performs optimizations that reduce the number of low-level floating point operations necessary for a specific task; this involves the optimization of chains of floating point operations as well as the implementation of a "fixed" point data type that allows some floating point operations to simulated with integer arithmetic. The source language of the compiler is a subset of C, and the destination language is assembly language for a micro-floating point CPU. An instruction-level simulator of the CPU was written to allow testing of the code. A series of test pieces of codes was compiled, both with and without optimization, to determine how effective these optimizations were.
Moving Money analyses the influence of politics on financial systems. Daniel Verdier examines how information asymmetry and economies of scale over time have created a redistributional conflict between large and small banks, financial centres and their peripheries, and he discusses how governments have attempted to arbitrate this conflict. He argues that centralized states have tended to create concentrated, internationalized, market-based and specialized financial systems, whereas decentralized states have favoured dispersed, national, bank-based and, with a few exceptions, universal systems. Verdier then sets out to uncover the sources, political and economic, of cross-country variation in financial market organization, examining 15 to 20 OECD countries from 1850 onwards
The decentralisation of educational administration in Indonesia has recently been the focus of much interest throughout the Asia-Pacific region. With its massive population and multi-ethnic social background, Indonesia serves as an interesting example when considering the real impact of decentralized systems on the financing of Junior Secondary Education in developing countries. In this paper, first, the decentralisation scheme and the current financial budgeting system at the school level of junior secondary education in Indonesia are outlined. Second, a quantitative analysis of the unit cost among provinces, districts and schools is detailed. Finally, policy tasks for the further development of decentralised administration will be identified. Even under the former centralised regime, each school or district was operating in a varied way, while it is also true that the process of this diversified financial budgeting was not always a strategic one.
INTRODUCTION After a quarter of a century, the State Environmental Quality Review Act (1) (SEQRA) is firmly in place as an integral part of New York's governmental landscape. It has furnished an absolutely vital fulcrum from which the public can participate in--and if necessary challenge--decisions inflicting environmental impacts on local communities. This statute has bolted the door forever on the notorious era when state and local governments could make land-use decisions in the proverbial smoke-filled room, injuring communities with impunity, exemplified by the oft-quoted line of that consummate builder, Robert Moses, that [o]nce you sink that first stake, ... they'll never make you pull it up. (2) SEQRA has halted---or significantly reduced the impact of--numerous actions of New York State and local government agencies, including shopping mall rezonings, highways, sports stadiums, and large-scale residential subdivisions. (3) The litigated decisions are but the tip of the iceberg; many more agency determinations have been modified mitigate their environmental impacts without--or in order avert--SEQRA litigation. Yet, like most statutes aimed at complex problems, SEQRA is not a panacea. There are several respects in which it could be more effective. (4) This brief article is intended focus on the most salient. SCOPE OF JUDICIAL REVIEW First, the courts accord great deference agency decisions involving the exercise of discretion. (5) After a series of early decisions overturning land-use determinations where agencies ignored SEQRA procedure entirely, (6) or blatantly violated the Act's procedures, (7) local governments learned--some more quickly than others--that courts would not hesitate step in where SEQRA was sidestepped. (8) But, as long as agencies follow SEQRA's procedures, i.e., preparing environmental impact statements (EISs) and weighing alternatives and measures mitigate harms, (9) courts are reluctant interfere with the actual determinations governments make. For example, in Jackson v. New York State Urban Development Corp., (10) the Court of Appeals rejected claims that an EIS for a major office building redevelopment around Manhattan's Times Square failed consider the gentrification and displacement of existing residents that would likely occur (11) (and in fact has). (12) This judicial attitude stems from a long history of judicial deference administrative bodies' expertise, based on the constitutional separation of powers and the hesitancy of judges substitute their judgment for that of the executive branch. (13) This has led, in some SEQRA cases, the courts upholding local government permits for large-scale development, despite the likelihood of severe impacts on traffic, water supply, sprawl and related concerns. (14) It is proper for the judiciary defer presumably expert--and responsible--government agencies when reviewing those bodies' decisions. (15) But this deference places a heavy burden on those administrative agencies--planning boards, town boards, highway departments, and the like--to genuinely take environmental issues into account, and not simply rubber-stamp projects with serious impacts. It also means citizens must be prepared furnish persuasive factual proof of potential environmental harms when opposing a development. (16) In the end, greater sophistication and organization among citizen groups are the best means of making SEQRA work, and, in the long run, of convincing elected officials that responsiveness environmental concerns is good politics. (17) But in addition, the courts ought not hesitate annul agencies' actions that neglect SEQRA's mandates nor should they or defer unduly agencies' expertise where environmental concerns have been given short shrift. (18) As the Second Circuit memorably held in Scenic Hudson Preservation Conference v. Federal Power Commission, (19) a landmark early environmental decision, agencies ought not to act as an umpire blandly calling balls and strikes for adversaries appearing before [them]; the right of the public must receive active and affirmative protection at the hands of the [agency]. …
The development of a "Next Generation Manufacturing System" is currently an active area of research worldwide. The research described in this dissertation addresses one sub-element within this research area; namely, the demonstration of a decentralized, automated production architecture. The goal of the work is to increase the ability of a manufacturing enterprise to respond to rapid technological and market change in the post-2000 global economy. The research is comprised of three objectives; definition of a decentralized organizational structure of autonomous production activities, implementation of the defined organization in a real world manufacturing environment, and a comparison of historical (centralized architecture) performance data and decentralized performance data. To accomplish these objectives, the proposed production architecture is implemented at a real world manufacturing site and performance data are acquired and tested against a stated hypothesis. The research entails the modification of a selected electronics module assembly activity in the following ways: 1) comprehensive automation of assembly processes; 2) simplification of production practice through a minimization of operator interaction and a reduction of assembly transaction points requiring operator intervention; and 3) restructuring of organizational functions resulting in decentralization and operational autonomy. The null hypothesis was successfully rejected and it was shown that the implementation of automation, simplification, and decentralization resulted in an enhancement of production performance (i.e., a reduction in throughput time, labor cost, overhead cost, and total product cost) without degrading production quality. A test of the null hypothesis based on the data indicates a statistically significant (i.e., p less than or equal to 0.05) reduction in throughput time, labor cost, overhead cost, and total product cost while no statistically significant difference in the before and after production quality data was shown. A possible interpretation of these results is that the implementation of automation, simplification, and decentralization did result in a reduction in the labor cost, overhead cost, and total product cost and did not result in a degradation in production quality.
Traditional watermarking systems require the complete disclosure of the watermarking key in the watermark verification process. In most systems an attacker is able to remove the watermark completely once the key is known, thus subverting the intention of copyright protection. To cope with this problem, public-key watermarking schemes were proposed that allow asymmetric watermark detection. Whereas a public key is used to insert watermarks in digital objects, the marks can be verified with a private key. Knowledge of this private key does not allow piracy. We describe two public-key watermarking schemes which are similar in spirit to zero-knowledge proofs. The key idea of one system is to verify a watermark in a blinded version of the document, where the scrambling is determined by the private key. A probabilistic protocol is constructed that allows public watermark detection with probability of 1/2; by iteration, the verifier can get any degree of certainty that the watermark is present. The second system is based on watermark attacks, using controlled counterfeiting to conceal real watermark data safely amid data useless to an attacker.
Advanced Steganography and Watermarking Techniques
* Infrastructure investment may indirectly affect firm productivity and household welfare through its impact on the location of economic activity. * State infrastructure policies currently favor decentralization--the opening of new territory to development and the movement of firms and households from dense urban environments to the surrounding suburbs. * Recent research, however, suggests that the clustering of producers and consumers in a given geographic area is economically and socially beneficial. * In light of this research, institutional reforms that would change the management and direction of public infrastructure investment may be in order. Agencies authorized to choose and finance investments that promote regional well-being would most likely target more investment to central cities and less to the surrounding suburbs. Public infrastructure is an important part of a well-functioning urban economy. Such infrastructure--defined here as publicly owned and maintained physical capital--has historically played a central role in allowing cities to grow by mitigating or reducing problems such as congested roadways, potholes, water-main breaks, and overcrowded schools. Yet while the benefit of some public works can hardly be disputed, a key policy issue is whether additions to our stock of public infrastructure provide overall benefits that exceed their costs. (1) That is to say, is the amount of infrastructure we have sufficient, or would we benefit from an increase? Another important question is, do our institutional structures promote efficient infrastructure investment decisions? As these questions suggest, the status of urban public infrastructure is an important topic. Education and highway facilities are being stretched to their limits in fast-growing cities and suburbs, while concerns are being raised about the level and physical condition of public works in slower growing, older central cities. (2) No doubt, public investment is an important function of government, and it is particularly crucial at the state and local level. In 1999, states and localities invested more than $210 billion in equipment, software, and structures (Table 1). By combining this amount with the nearly $43 billion in nondefense investments made by the federal government, we see that new gross public investment in 1999 exceeded a quarter-trillion dollars, or 2.7 percent of GDP. Moreover, the stock of publicly owned nondefense capital in 1999 exceeded $4.5 trillion, or nearly 50 percent of GDP. (3) Although complete data on the geographic distribution of this spending are not available, it is certain that a large share of these national totals, particularly the state and local portions, is going to public investment in and around America's metropolitan areas. More than 200 million people reside in these areas, and the public investments made there affect the lives of a large and growing share of the U.S. population. (4) Accordingly, the question of whether we should increase the amount of infrastructure available has received much attention from economists. This article puts that research into a broad perspective, attempts to draw policy conclusions from what is known, and suggests some directions for further research. Infrastructure investments can affect social welfare in two ways (see Appendix A). One way is by adding to economic growth. The relationship between infrastructure and economic growth has been the subject of intensive economic research over the past decade. The second way in which infrastructure investments can affect social welfare is by potentially improving the quality of life of those living in the invested area. For example, public parks, water systems, and other facilities can improve social welfare without having any effect on residents' incomes. This article also examines this second channel, which has received less attention in the research, in part because the value of quality-of-life improvements is difficult to measure. …