decision-making unit of analysis. The above presented framework allows us to study graphically the optiifial structure of provision for road services. The concepts developed so far are applied in the next section.

# 4. **Data Definition and Sources**

The performance of roads is measured by the double cost concept introduced in the previous sections. Resource costs are defined in terms of unit cost of road works for the activities of construction, maintenance, and administration measured in $ per km of road. These are essentially the input costs. A measure for preference costs is derived using a framework developed by Ben-Akiva et al (1993) where condition of roads are substituted as a proxy for users costs while utilizing roads of a given condition. Decentralization is measured in terms of percentage local government contribution towards road works.

The analysis relies on data from three main sources: (a) cross-country and time series data on the unit costs of construction, maintenance and administration, the percent roads in bad condition (as measured by a proxy developed in the World Development Report of 1994 on Infrastructure and Development), and the contribution of local governments to financing road expenditures are obtained from the International Road Federation (IRF) statistics'° for eight countries: Argentina (1982-86), Brazil (1982-93), Colombia (1982-90), South Africa (1982-1989), Germany (1982-92), USA (1982-92), Philippines II ~~~~~~~~~12 (1982-86) , and Indonesia (1982-86) ; '° The quality of data from the International Road Federation may suffer from problems of precision. Many countries are unable to report with any precision the expenditures of local govermnent units of roads sicne their accounting systems do not record these data directly. Therefore, most of the local government data is based on estimates. This is the main reason why we used a case study from Germany where we conducted an original data collection and verified the results with supportive field work before using the definitions of data we used in the final analysis. The cases of Germany and Korea provide qualifying evidence of the findings in the cross-country cases.

I There may be an overestimate of the length of roads pertaining to a class called "baranguay" which may overstate the importance of the class of roads at the subnational level in the case of the Philippines. To avoid the effect of classification on the results of the analysis, we use the overall network length at the national level. We expect that the incentives to over- or under-state the length of a particular category of roads to vary by country and have used a country-specific dummy in a cross-country analysis presented in a companion paper (see Humplick and Moini-Araghi, 1995).

12 The period 1982-86 for which data for Indonesia is available is a period when there was a priority given to betterment and reconstruction of the existing main road network (arterial and collector). That is, substanntial improvement in quality with little extension, and substantial external funding. In the same period, the local (district) network was extended about 100% by inclusion of low standard roads which would appear to reduce the average "quality". The analysis conducted in this study is based on the total netwrok of arterials, collectors, and low standard roads. This could mean that the "preference costs" for Indonesia are underestimated due to the "dilution" of the quality impacts.

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