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The estimated sign of the coefficient in the base regression sets (rables 6 & 7) indicates that a one unit increase in the value of GASTIL (indicating poorer institutional development) results in approximately a (1980) US $ 2.50 decrease in per capita central budget expenditures. The implied elasticity at the sample mean values for GASTIL and BTACCAPK is just over -0.60. There is some variation in the estimated magnitude of the impact across specifications. Excluding the anomalous cases mentioned above, the estimated impact of a one unit increase in the value of GASTIL is between (1980) US$-2.00 and US$3.50.

# _13. Level and Mix of External Funding_

Central budget per capita infrastructure expenditures are positively associated with foreign savings flows.<sup>12</sup> In all regressions including net per capita savings flows alone, NFFCAP1K has a positive coefficient which, with few exceptions, is significant at the 1 percent level, as can be seen from Tables 6 and 7 and Appendix B. External funding remains a significantly positive determinant of central budget per capita infrastructure expenditures regardless of whether or not IMF credit is included in the tally of foreign savings flows, as can be seen from Table B7. The estimated magnitude of the impact is, however, quite small and amounts to only (1980) US $ 0.02 for every (1980) US $1.00 increase in net per capita foreign savings. At the sample mean values of NFFCAP1K and BTACCAPK the elasticity is 0.06. The estimated magnitude of the impact is surprisingly stable across all sensitivity analyses.

The mix of foreign funding influences infrastructure expenditures. In particular, holding the total magnitude of foreign funding constant, commercial bank flows induce increased infrastructure expenditures, while, contrary to expectations, the relationship between direct foreign investment and per capita central budget infrastructure expenditures is U shaped. Infrastructure expenditures fall with increases in direct foreign investment until the level of direct foreign investment reaches about 1.4 percent of GDP; per capita infrastructure investment only increases with increases in direct foreign investment in countries where the level of direct foreign investment is about one standard deviation above the mean sample value. Countries receiving a high percentage of foreign savings as official transfers do not spend any more or less on infrastructure than other countries receiving the same magnitude of total foreign funding. Again, this latter finding is insensitive to whether official flows are defined to include or exclude IMF credit, as can be seen from Table B7.

# _- 14. Government Objectives Poveny Commitment_

The results indicate that a government's commitment to poverty alleviation influences per capita central government infrastructure expenditures. The effect follows an inverted-U pattern. Initially as commitment to poverty alleviation increases, per capita central budget expenditures on infrastructure increase as well. Once the level of commitment to poverty alleviation reaches a certain threshold, however, a further increase in commitment leads to decreased expenditures on infrastructure. This suggests that governments with some, but