Investments and capital stocks as estimations for health infrastructure in the European countries (EU28)

Diskussionspapiere des Europäischen Instituts für Sozioökonomie e. V. Working Papers of the European Institute for Socioeconomics Investments and capital stocks as estimations for health infrastructure in the European Countries (EU28) Michael Koch Nr. 25 2018 Michael Koch Fachbereich: Sportökonomie und Sportsoziologie Adresse: Fakultät für empirische Humanwissenschaften und Wirtschaftswissenschaft Universität des Saarlandes 66123 Saarbrücken Tel: 0049 (0)681 302 4912 E-Mail: [email protected] © 2018 Europäisches Institut für Sozioökonomie e. V. / European Institute for Socioeconomics c/o Universität des Saarlandes Sportwissenschaftliches Institut Arbeitsbereich Sportökonomie und Sportsoziologie Campus, Gebäude 8.1 66123 Saarbrücken http://www.soziooekonomie.org Investments and capital stocks as estimations for health infrastructure in the European Countries (EU28) Michael Koch Abstract: Health is, beside of other services and commodities, e.g. education or social housing, a merit, quasi-public good. Since private provision of health services would presumptively not be sufficient in quality and quantity, one could argue there is a responsibility by the state to provide a sufficient amount of health services to its population. However, it is difficult to quantify the sufficient amount with public goods, in general. One required component of the healthcare provision is infrastructure, such as hospitals, operation theaters etc. and its related equipment, such as beds, imaging devices etc. To estimate the existing infrastructure in the European countries, without an on-the-ground evaluation, we use investment time series for tangible and intangible assets (Gross Fixed Capital Formation) reported to Eurostat and compute Capital Stock for each country, using the Perpetual Inventory Method (PIM) considering country specific depreciation rates and growth rates for each included asset. Based on the last computed capital stock in 2016 as benchmark, we evaluate the effect of the global financial crises in 2008. Furthermore, we run two future scenarios for EU28 in total and each country: (I) how much annual investment is needed, such that the capital stocks keep pace with annual GDP growth rates and (II) how much annual investment is needed, such that the 2016 capital stock per capita can be maintained in the future. Keywords: Perpetual-Inventory-Method, Capital Stock, Investment Time Series, Health Infrastructure, European Union ! 4! Investments(and(capital(stocks(as(estimations(for(health( infrastructure(in(the(European(Countries((EU28)( by!Michael!Koch! Preface( This!working!paper!is!an!adaption!of!the!final!report!of!the!project!“Capital!stocks!and! investment! needs! in! the! physical! infrastructure! of! the! health! sector! in! European! countries”!by!Michael!Koch!on!behalf!of!the!European!Investment!Bank,!Luxembourg.!This! research! is! based! on! previous! work!(unpublished)! on! ‘capital! stocks! and! investment! needs! in! the! physical! infrastructure! of! the! education! sector’! by! Hubert! Strauss! and! Michael!Koch.!! Any!errors!remain! those!of!the!authors.! The!findings,!interpretations!and! conclusions! presented!in!this!research!are!entirely!those!of!the!authors!and!should!not!be!attributed! in!any!manner!to!the!European!Investment!Bank.!Results!exposed!are!preliminary!and! may!be!subject!to!future!revisions.!! Introduction( Health!and!other!services!and!goods,!e.g.!social!housing!and!education!are!major!areas!of! states! responsibility.! The! ideal-typical! form! of! so-called!public! goods!show! two! main! characteristics:!First,!the!use!of!the!good!or!service!by!one!person!does!not!preclude!its! simultaneous!use!by!a!different!person!and!second,!nobody!can!be!excluded!from!the!use! of! the!good! or! service! (e.g.! Musgrave,! 1969).!Examples! are! national! defence,! public! fireworks,!etc.!are!naturally!given!public!goods!like!e.g.!clean!air!or!nature!(mountains,! rivers,!forest)!in!general.!Depending!on!how!strict!public!goods!are!defined,!also!health,! education! or! museums! among! others,! can! be! included! as! public! goods.! Because! excludability!is! possible! here,! they! are! usually! classified! as! quasi-public! goods.! Those! goods! (e.g.! health,! education! and! social! housing)! are! merit! goods,! meaning,! that! the! service,!or!more!general!commodity,!should!be!universally!provided!to!individuals!or!the! society!in!total,!since!without!public!provision!danger!increases,!that!the!private!offer!is! not!sufficient!in!quality!and!quantity.!Thus,!there!is!a!(greater!or!lesser)!responsibility!by! the! state! to! provide! those! goods! to! its! population.! Questions! about! who! should! be! included!or!excluded!as!legit!user!of!those!goods,!how!they!should!be!financed!and!by! ! 5! whom!they!should!be!provided! are! complex! questions!for!each!state!and! subject! of! a! permanent! process! of! coordination.! In! the! following,! merit! quasi-public! goods,! e.g.! education,! health! or! social! housing! are! named! as! ‘social! goods’,! with! reference! to! Musgrave!(1969)!and!for!a!clear!differentiation!against!public!goods!(for!a!discussion!cf.! Desmarais-Tremblay,!2014).!! Various!historical!developments!and!different!degrees!of!centralisation!lead!to!different! approaches!in!countries!about!how!to!provide!mentioned!services!to!their!inhabitants.! They!are!important!areas!for!the!development!of!a!country!or!in!reverse:!the!development! of!a!country!can!be!indicated!by!the!quantity!and!quality!of!provided!services.!! Future!challenges!might!increase!the!need!of!public!services:! • In!education:!The!need!of!tertiary!education!increases!since!the!amount!of!bluecollar!jobs!decrease!and!technological!and!knowledge!related!jobs!increase.!! • In! health:! The! amount! of! elderly! population! increases,! such! that! naturally! the! amount!of!related!health!problems!increases!and!need!treatment.!! • In!social( housing:!Urban! areas! experience! a! steady!influx!which!increases!the! demand!for!housing!and!especially!affordable!housing.!Because!construction!costs! are!a!major!part!of!total!building!costs,!the!difference!in!construction!costs!for!low! and!high!standard!housing!are!minor!while!real!estate!developer!can!generate!an! income!premium!with!high!standard!housing.!! In!addition,!the!plurality!of!countries!has!committed!themselves!to!pursue!the!sustainable! development!goals!(SDG,!United!Nations,!2018).!Beside!of!‘good!health!and!well-being’! (Goal!3),!‘quality!education’!(Goal!4)!and!‘sustainable!cities!and!communities’!(Goal!11),! which!represent!the!social!goods!mentioned!above,!other!challenges!like!‘affordable!and! clean!energy’!(Goal!7)!and!‘industry,!innovation!and!infrastructure’!(Goal!9)!are!targeted.! The!provision!of!social!goods!and!the!state’s!efforts!to!reach!the!SDG!does!not!come!by!no! cost.! Instead! it! is! a! major! challenge! to! provide! the! optimal! amount! of! services! to! the! country!and!its!inhabitants.!The!financing!of!countries’!duties!is!mostly!realised!by!tax! and!loans.!While!some!taxes!are!earmarked!for!certain!tasks,!others!enter!the!general! state!budget!together!and!can!be!used!for!different!duties.!The!allocation!of!resources!to! fulfil!government!tasks!and!the!monitoring!the!compliance!with!the!budgetary!objectives! are! amongst! the! responsibilities! of! the! parliament! (in! democracies).! Since! the! state! ! 6! budget!is!finite,!the!allocation!of!resources!needs!to!be!negotiated!between!governmental! departments!and!together!with!the!members!of!parliament.!! While!on!the!“free!market”!the!optimal!amount!of!a!normal!good!(and!its!price)!can!be! determined!by!the!interplay!of!supply!and!demand,!it!is!hard!to!tell,!what!quantity!and/or! quality!of!a!certain!social!good 1 !would!be!optimal.!It!depends!to!a!certain!amount!on!the! historical!development!and!the!resulting!‘philosophy’!of!a!country,!while!a!real!market! price!cannot!be!determined 2 .!Therefore,!negotiations!in!government!and!parliament!need! to! be! based! on! other! latent! variables.! This!opens! the! political! area! for! discretionary! leeway.! When! the! allocation! part! is! set,! more! thoughts! need! to! go! into! the! how! the! production!of!the!(public)!goods!should!be!happen.!Two!major!options!are!possible!with! their! respective! advantages! and! disadvantages,! e.g.! tendency! of! increasing! bureaucratization!and!budget-maximization!in!public!administration!(Niskanen,!1971),! principal-agent-problem! when! engaging! contracting! companies! (Coase,! 1937),! rationalization!in!bureaucracy!(Weber,!1921)!and!allocation!efficiency!(Arrow,!1962).!It! also!depends!on! tendencies! to! monopolization! that! can! result! from! government! interventions.!! Typically,! politicians,! institutions! (NGO),! scientists! and! other! stakeholders!on! international,!national!or!even!local!level,!are!recurrently!concerned!in!random!order!that! not!enough!attention!and!financing!has!been!directed!to!one!or!the!other!public!domain! and! its! related! commodities 3 .! Since! the! optimal! quality! and/or! quantity! is! hard! to! determine,!it!is!also!hard!to!disagree!on!further!investment,!especially!when!grievances! are!real.!There!is!a!strong!knowledge!base!however,!that!investment!(in!infrastructure),! the!amount!of!infrastructure 4 !and!the!economic!power!(GDP!growth,!income!distribution,! inequality,! etc)!are! strongly! correlated,! which! additionally! justify! high! amounts! of! investments! (Calderón! &! Servén,! 2014).! On! EU28! average,! the! expenditure! for! health! accounts! for!9.6%! of! GDP! in! 2014! (WHO,! 2017),! while! middle! and! north! European! countries!have!mostly!spent!larger!percentages.!Countries!differ!regarding!the!amount! !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! ! 1 !Normally!the!price!for!social!goods!(as!quasi-public!good)!cannot!be!determined!and!therefore!neither! related!opportunity!costs.!! 2 !There!is!a!private!sector!in!health!and!education!and!also!philanthropist!make!efforts!to!provide!services.! Thus,!there!is!an!actual!market!price!for!health!and!education!services,!however!it!would!be!most!likely!too! expensive!for!the!majority!of!people.!In!turn,!that!is!why!government!make!the!provision!their!duty.! 3 !Institutions,!which!go!public!with!specific!concerns!in!their!scope,!regardless!if!it!is!true!or!false,!also!signal! the!necessity!of!their!existing!(Crawford!&!Sobel,!1982).! 4 !In!National!Accounts!(ESA2010)!investments!in!infrastructure!is!defined!as!Gross!Fixed!Capital!Formation! and! includes! tangible! and! intangible! assets.! In! this! revised! edition! also! investments! in! Research! and! Development!are!considered.!(Lequiller!&!Blades,!2014)! ! 7! individuals!must!pay!out$of$pocket!for!health!services.!While!in!northern!countries,!social! goods,!e.g.!health!service!are!taxed!financed!to!a!major!degree 5 ,!other!countries!rely!more! on!private!(for!profit!and!non-profit)!providers!(OECD,!2018).!! ! Figure(1:(Health(expenditure(as(%(of(GDP(and(share(of(private(out(of(pocket(expenditure.(Source:( WHO((H2020_30,(H2020_29),(own(calculations.( ! Infrastructure( Infrastructure!together!with!human!recourses!and!operation!are!crucial!assets!for!the! provision! of! social!goods.!While! infrastructure! might! be! less! important! in! the! case! of! education,!while!human!resources!play!an!essential!role!(Nicoletti!&!Rabe,!2012,!OECD,! 2012) 6 ,! the! need! of! infrastructure! for! the! provision! of! health! services! (hospitals,! operation!theatres,!MRI,!RT,!etc.)!or!social!housing!(apartments,!houses,!etc.)!is!obvious.! Various!events!in!recent!time!show!for!different!countries,!that!infrastructure!is!a!main! concern!in!society!and!thus!in!politics!and!media.!! One! reason! for! low! infrastructure! investments! in! recent! years! might! be! the! global! financial!crises.!If!circumstances!ask!for!expenditure!cuts,!the!reduction!of!investments!in! infrastructure!is!a!common!reaction,!since!expenditure!for!human!resources!(e.g.!medical! and!nursing!staff)!and!operation!resources!and!systems!(e.g.!food!supply!in!hospital!for! patients!and!staff)!cannot!be!spontaneously!reduced.!Whereas!existing!infrastructure!can! !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! ! 5 !Even!though!the!health!system!in!the!northern!European!countries!is!predominantly!taxed!financed,!out! of!pocket!expenditure!for!health!still!account!for!14%!in!Sweden,!13%!in!Denmark!and!18%!in!Finland! (WHO,!2017).!!! 6 !Even!though!new!technologies!have!become!more!important!as!didactic!methods!lately!and!a!technology! driven!modern!working!world!ask!for!a!corresponding!educational!programme.!! 0% 2% 4% 6% 8% 10% 12% 14% SE FR DE AT NL DK BE MT FI PT EU28 IT SI UK ES EL SK HR IE CZ HU CY LU LT EE PL LV BG RO ! 8! be!still!used!for!the!provision!of!services!to!a!certain!extent,!even!if!no!new!investments! are! made.! Maintenance! works! can! be! postponed! to! a! later! date.! Even! though! some! European!countries! issued! investment! programs! to! stimulate! the! domestic! economy! during!crisis!years!the!total!infrastructure!investments!in!EU28!arguably!would!have!been! higher,!since!economy!was!on!the!rise!pre-crisis.!! Table(1:(Composition(of(Gross(Domestic(Product((e.g.(Lequiller(&(Blades,(2014).( ! A! countries’! infrastructure! investments! are! represented! in! the! structure! of! national! accounts!(ESA2010)!as!Gross$Fixed$Capital$Formation!(GFCF)!and!account!for!approx.!20%! of! GDP!(Eurostat,! 2018).! Here! all! investments! for! the! production! and! maintenance! of! tangible!and!intangible!assets!are!accumulated.!The!investment!in!infrastructure!based! on!GFCF!data!(ESA2010)!in!the!health!sector!can!be!estimated!with!0,74%!of!GDP!in!2017.! Larger! shares! of! GFCF! are! going! into! real! estate! activities! (5,8%),! industry! (except! construction)!(4,1%)!and!wholesale!and!retail!trade,!transport,!accommodation!and!food! service!activities!(2,3%)!(Figure!2-4).!! Consequently,! investments! in! adequate! infrastructure! in! the! health! sector! are! only! a! minor!fraction!of!total!health!expenditure,!but!crucial!for!the!provision!of!health!services! while!operation!and!human!resources!are!more!cost-intensive.!! ! Gross(Domestic(Product(=(( Final(consumption(expenditure( ( +!Household!and!non--profit!institutions!serving!households!final!expenditure! ( +!Governmental!final!consumption!expenditure! +(Gross(capital(formation( ! +!Gross!fixed!capital!formation! ! +!Changes!in!inventories! ! +!Acquisition!less!disposal!of!valuables! +(External(balance(of(goods(and(services( ! +!Exports! ! -!Imports! ! 9! ! Figure(2:(Composition(of(the(Gross(Domestic(Product(of(the(European(Union((EU28)(2005-2017.( Source:(Eurostat.( ! Figure( 3:( Composition( of( Gross( capital( formation( of( the( European( Union( (EU28)( 2005-2017.(( Source:(Eurostat.( ! Figure( 4:( Proportions( of( industries( on( Gross( Fixed( Capital( Formation( in( 2017.( Source:(Eurostat.( 0 10 20 30 40 50 60 70 80 90 100 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 % Final!consumption!expenditure Gross!capital!formation External!balance!of!goods!and!services -10 0 10 20 30 40 50 60 70 80 90 100 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 % Gross!fixed!capital!formation Changes!in!inventories!and!acquisitions!less!disposals!of!valuables 2,47% 20,32% 3,14% 11,60% 4,90% 2,45% 28,75% 4,13% 4,01% 8,70% 3,53% 3,72% 1,66% 0,62% Agriculture,!forestry!and fishing Industry!(except construction) Construction Wholesale!and!retail trade,!transport, accomodation!and!food… Information!and communication Financial!and!insurance activities Real!estate!activities Professional,!scientific!and technical!activities Administrative!and support!service!activities Public!administration!and defence;!compulsory social!security Education Human!health!and!social work!activities Arts,!entertainment!and recreation Other!service!activities ! 16! We!further!assume!geometric!depreciation 10 !pattern!with!a!constant!depreciation!rate!δ,! we!can!rewrite:! 56= ( 1 − B ) 5689 + =6 ! For!t%=%1!the!equation!is! 59= ( 1 − B ) 5G+ =9 ! with %5G≡ 0 !! ! ! ! ! 59= =9 !! !and!!!!!! 56= ∑ %(1 − B)K 689 KLG ∗ =K89 ! Herewith! the! Capital! Stocks! K! at! time! t! is! the! sum! of! investment! depreciates! with! its! depreciation!rate!δ!and!with!respect!to!its!vintage.!In!fact,!the!perpetual!inventory!method! rest!on!some!underlying!assumptions.!! For!our!purpose!we!assume:!! • We! use!a! geometric! depreciation,! which! is! based! on! works! by! OECD! and! EUROSTAT.!We!also!consider!a!balance!rate!of!α!=!1.6!to!get!a!better!match!of! depreciation! pattern! and! real! life! (Blades,! 2000;! OECD,! 2009;! Erumban,! 2008;! Bergen!et!al.!2009).!The!influence!of!a!mortality!function!is!already!included!here! (table!2).!! • We!start!the!calculation!of!the!capital!stocks!in!1970!with!a!benchmark!capital! stock!Kt0.!We!should!have!a!time!series!reaching!into!the!past!long!enough,!such! that!the!tangible!assets,!which!have!been!acquired!with!past!investment,!are!fully! replaced!when!capital!stocks!are!analysed.!With!expected!service!lives!of!40!years! for!construction!work,!we!therefore!seek!investment!time!series!till!at!least!1975,! with!the!more!years!the!better.!We!start!in!1970.! • Following! Blades! (2015)! and! the! OECD! manual! (2009),! the! initial! benchmark! capital! stock! can! be! approximated! with! the! first! known! (but! in! some! cases! estimated)!investment!It0,!the!average!depreciation!rate! M N % for!each!asset!type!and! the! average! growth! rate! O N.! Instead! of! assuming! K0! to! be! 0! we! estimate! K0!as! follows:! 5G=PQR (S T UV T ) .! !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! ! 10 !We!are!going!with!geographic!depreciation!rates,!meaning!that!actually!no!asset!would!normally!retire.! However,!following!Eurostat,!&!OECD!(2015),!assets!are!normally!going!out!of!service!with!a!salvage!value! of!10%!of!initial!value,!while!new!investments!for!maintenance!extend!the!service!life!of!assets.! ! 17! Table(2:(Asset(type,(expected(average(service(life(and(depreciation(rate(considering(a(balance(rate( of(α(=(1.6.( Asset(type( Service(Life( Depreciation( rate( Construction!(dwellings!and!other!buildings!and! structures)! 40! 4,0%! Machinery!and!Equipment! ! ! Transport! 9! 17,8%! ICT! 5! 32%! Other!Machinery!and!Equipment! 12! 13,3%! Intellectual!properties!/!R&D! 10! 16,0%! Software! 3! 53,3%! EU-28(average((2005-2016)( ( 6,81%( ! Benchmarking(and(future(scenarios( The! first! part! of! our! analysis! is! retrospective! and! evaluates! the! amount! of! past! investments! and! the! development! of! the! dependent! Capital! Stocks.! With! given! information! on! historical! landmarks! (e.g.! the! global! financial! crises! or! political! intervention!in!different!countries)!we!might!explain!the!evolution!of!investments!and!the! Capital!Stocks.!Furthermore,!we!can!examine!if!targeted!milestones!have!been!reached! (e.g.!did!investments!in!the!health!sector!follow!the!national!(regional)!growth!rates!of! GDP?!Or!could!a!country!maintain!or!even!increase!the!capital!stock!volumes?).!! In!a!second!part!we!model!two!different!scenarios!to!predict!how!the!investments,!as! affecting!variable,!have!to!develop,!such!that!predefined!benchmarks!can!be!reached.!The! scenarios!start!in!2016!and!run!till!2030.!We!also!consider!population!estimates!retrieved! from! Eurostat! (2018).! Possible! changes! of! the! health! system!in! the! future! are! not! considered!and!kept!constant.!The!Capital!Stocks!of!2016!is!taken!as!the!basis!for!the! scenarios.!Future!depreciation!rates!(to!compute!future!Capital!Stocks)!are!kept!constant! with!the!average!of!past!depreciation!rates!from!2014-2016.!The!scenarios!are!defined!as! follows:!! ! ! 18! - Scenario(1((optimistic(scenario):(Given!the!Capital!Stocks!of!2016!and!the!estimates! of!population!size!in!the!future,!we!change!investments!with!the!growth!rates!of!GDP! projections!(OECD,!2018).!( o Idea:(GFCF!and!thus!investments!in!the!health!sector!is!a!fraction!of!the! national!GDP.!Assuming!that!the!portion!should!be!more!or!less!constant,! the!annual!investments!should!increase,!when!GDP!increases.!( - Scenario(2((conservative(scenario):(Given!the!estimates!for!the!population!size!in! the!future,!and!Capital!Stocks!at!2016!level,!we!change!the!Capitals!Stocks!in!a!way,! such!that!the!ratio!of!Capital!Stocks!per!capita!stay!constant!over!time.( o Idea:( The! need! of! health! service! changes! over! time! due! to! population! changes!(birth!rates),!migration,!etc.!Thus,!we!examine!how!Capital!Stocks! and!therefore!investments!might!change!without!individuals!experience!a! loss.( Neither!scenario!1!or!2!imply,!that!countries’!capital!stock!volumes!in!2016!are!optimal! volumes,! nor! that! estimated! investments! in! the! future! are! on! optimal! level! for! each! country.!Even!no!other!capital!stock!can!be!seen!as!the!only!optimal!volume!and!therefore! cannot!function!as!benchmark!per!se.!Hence!either!the!benchmark!is!set!in!a!relationship! with!performance!parameter!such!that!effectiveness!or!efficiency!count,!e.g.!for!a!crosscountry!analysis,!or!in!a!longitudinal!perspective!the!highest!capital!stock!volume!in!the! course!of!time!is!set!as!benchmark.!Then!any!downward!deviation!must!be!considered!as! negative!development.!We!examine!both!perspectives!later!on.!In!contrast!to!common! concerns!(e.g.!Fransen!et!al.!2017)!however,!we!would!rate!lower!investments!as!a!crucial! issue!only!if!investment!go!down!for!longer!periods!and!there!is!a!risk!for!or!an!actual! decrease!of!capital!stock!volumes.!Otherwise!volatility!is!viewed!as!“normal”.!! Results( As! mentioned! before,! investments,! e.g.! in! infrastructure! are! volatile! in! longitudinal! perspective! and! are! affected! by! macro-economic! variables! and! political! decisions.! Infrastructure!investments!happen!cyclical,!meaning!after!times!of!high!investments!in! tangible!and!intangible!assets,!investments!might!be!reduced.!Wear!and!tear!only!show! after!a!longer!period!depending!on!the!average!service!life,!such!that!the!assets!can!be! utilized!without!a!noticeable!loss!of!function!for!some!time.! ! 19! Investments!in!health!made!by!EU28!countries!in!2016!accumulate!to!EUR!65.8!bn,!which! is!similar!to!pre-crises!volumes!from!2007!(EUR!64.7!bn).!In!pre-crises!years!investments! showed! an! annual! increase! of! 3! to! 4! %,! but! when! in! 2008! the! global! financial! crises! emerged,!investments!stagnated!and/or!temporary!decreased!in!the!following!years,!with! the! lowest! amount! in! 2013! (EUR! 60.2! bn).! Between! 2007-2016! lowered! investments! accumulated!to!an!“investment!gap”!of!EUR!13.9!bn,!in!comparison!to!the!case,!when!2007! investment! level! would! have! been! kept! constant! until! 2016.! Decreasing! investments! become!evident!in!GER,!EST,!GRE,!ESP,!ITA,!CYP,!LUX,!SVK!and!UK 11 .!! ! Figure( 7:( EU28( investments( in( health( infrastructure( 2005-2016.( Gross( fixed( capital( formation,( accumulated(data(for(EU28.(Real(volumes.(Inflation-adjusted(with(implicit(deflator((2010(=(100).( EU28( aggregate( does( not( include( data( from( Croatia,( Latvia,( Lithuania,( Malta.( Source:( Eurostat( (nama_10_nfa_fl),(own(calculations.(( ! Public! investment! in! health! in! EU28! is! around! half! (56%)! of! total! investment! and! accumulate!to!EUR!35.2!bn!in!2016,!which!is!a!plus!of!5%!in!comparison!to!2007!but!a! decrease!of!2,8%!(EUR!1bn)!in!comparison!to!2010.!In!meantime!no!investment!gap!but! a!plus!of!EUR!12.0!bn!can!be!observed!in!comparison!to!the!case,!when!2007!investment! level!would!have!been!kept!constant!until!2016.!With!2010!investment!as!baseline!the! investment!gap!would!accumulate!to!EUR!13.4!bn,.!While!the!total!investment!in!EU28! decreased!in!crises!years,!the!public!investment!increased!until!2010!which!might!be!due! to!an!anti-cyclical!Keynesian!economic!policy!in!some!countries,!but!has!been!reduced! afterwards,!starting!to!increase!again!in!2013.In!2016!however,!former!investment!levels! have!not!been!reached!yet,!which!indicates!a!tendency!for!state!budget!consolidations.!! !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! ! 11 !UK!accumulated!investment!gap!is!highest!with!EUR!28.5!bn,!thus!excluding!UK!because!of!Brexit!would! result!in!investment!surplus!for!then!EU27!(+!EUR!14.5!bn).! 0 10 20 30 40 50 60 70 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 bn(EUR ! 20! ! Figure(8:(EU28(public(investment(in(health(infrastructure(2005-2016.(Gross(fixed(capital(formation,( accumulated(data(for(EU28.(Real(volumes.(Inflation-adjusted(with(implicit(deflator((2010(=(100).( EU28(aggregate(does(not(include(data(from(Germany,(Estonia,(Ireland,(Spain,(Croatia,(Cyprus,(Latvia,( Lithuania,(Malta,(Poland,(Slovenia.(Source:(Eurostat((gov_10a_exp),(own(calculations.( ! Taking!the!population!into!account,!the!investments!per!capita!in!health!infrastructure!in! EU28!accumulate!to!volumes!between!EUR!117!(2005)!and!EUR!129!(2007)!per!capita! per!year.!Since!population!numbers!only!increase!a!little!(cf.!EUROSTAT!demo_pjan),!the! change!in!investments!per!capita!is!mostly!driven!by!the!variation!of!total!investment! numbers.!Public!investments!per!capita!account!for!volumes!between!EUR!63!(2013)!and! EUR!72!(2010)!per!capita!per!year.! ! Figure( 9:( EU28( investment( in( health( infrastructure( per( capita( 2005-2016.( Gross( fixed( capital( formation,(accumulated(data(for(EU28.(Real(volumes.(Inflation-adjusted(with(implicit(deflator((2010( =(100).(EU28(aggregate(does(not(include(data(from(Croatia,(Latvia,(Lithuania,(Malta.(Source:(Eurostat( (nama_10_nfa_fl,(demo_pjan),(own(calculations.( 0 10 20 30 40 50 60 70 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 bn(EUR 0 20 40 60 80 100 120 140 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 EUR ! 21! ! Figure( 10:( EU28( public( investment( in( health( infrastructure( 2005-2016.( Gross( fixed( capital( formation,(accumulated(data(for(EU28.(Real(volumes.(Inflation-adjusted(with(implicit(deflator((2010( =(100).(EU28(aggregate(does(not(include(data(from(Germany,(Estonia,(Ireland,(Spain,(Croatia,(Cyprus,( Latvia,( Lithuania,( Malta,( Poland,( Slovenia.( Source:( Eurostat( (gov_10a_exp,( demo_pjan),( own( calculations.( ! The! accumulated! capital! stock! for! EU28! in! 2005,! based! on! the! perpetual! inventory! method!(PIM)!can!be!estimated!with!approx.!EUR!645!bn!in!total!and!with!EUR!1,302!per! capita.!While!investments!vary! significantly! over!time,!the!annual! capital!stocks!show! steady!annual!increase!of!1.92%,!which!is!a!plus!of!1.63%!p.a.!for!capital!stocks!per!capita.! Thus,!even!though!a!reduction!of!health!infrastructure!investments!is!evident!between! 2008! and! 2016,! investments! have! been! high! enough! not! only! to! replace! depreciated! capital!stock!but!also!to!further!extend!the!capital!stock!volume.!The!annual!growth!of!the! capital!stock!depends!i.a.!on!the!ratio!between!investment!and!current!capital!stock!which! is!8.3%!for!the!national!accounts!time!series.!Nevertheless,!the!lower!investments!lead!to! a! restrained! increase! of! the! capital! stock! from! 2010! to! 2014! but! accelerate! again! thereafter.!In!2016!the!capital!stock!increased!to!EUR!1,556!per!capita.! !- !20 !40 !60 !80 !100 !120 !140 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 EUR ! 22! ! Figure(11:(Capital(stock(estimation(using(PIM.(Real(volumes.(EU28(aggregate(does(not(include(data( from(Croatia,(Latvia,(Lithuania,(Malta.(Source:(Eurostat((nama_10_nfa_fl),(own(calculations.( ! Figure(12:(Capital(stock(per(capita(estimation(using(PIM.(Real(volumes.(EU28(aggregate(does(not( include(data(from(Croatia,(Latvia,(Lithuania,(Malta.(Source:(Eurostat((nama_10_nfa_fl,(demo_pjan),( own(calculations.( ! The!capital!stock!of!the!public!domain!has!a!volume!of!approx.!EUR!350!bn!which!is!ca.! 54%!of!the!total!capital!stock!in!EU28!in!2005.!The!annual!increase!is!1,48%,!which!is!a! plus!of!1.2%!p.a.!on!capita!level!and!slightly!lower!rates!than!in!total.!Similar!to!the!total! capital! stock,! growth! is! slowed! after! 2010! in! total! volumes! and! per! capita.! The! ratio! between! investments! and! capital! stock! is! 8.4%.! If! public! investments! stay! on! current! levels,!further!extension!of!public!capital!stock!will!completely!trail!off.!! 0 100 200 300 400 500 600 700 800 900 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 bn(EUR 0 200 400 600 800 1000 1200 1400 1600 1800 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 EUR ! 23! ! Figure(13(Capital(stock(estimation(using(PIM.(Real(volumes.(EU28(aggregate(does(not(include(data( from(Germany,(Estonia,(Ireland,(Spain,(Croatia,(Cyprus,(Latvia,(Lithuania,(Malta,(Poland,(Slovenia.( Source:(Eurostat((gov_10a_exp),(own(calculations.(( ! Figure(14:(Public(capital(stock(per(capita(estimation(using(PIM.(Real(volumes.(EU28(aggregate(does( not(include(data(from(Germany,(Estonia,(Ireland,(Spain,(Croatia,(Cyprus,(Latvia,(Lithuania,(Malta,( Poland,(Slovenia.(Source:(Eurostat((gov_10a_exp,(demo_pjan),(own(calculations.(( ( In!comparison!with!the!evolution!of!GDP!(figure!15),!capital!stock!increases!faster!than! GDP!especially!during!the!financial!crisis,!thus!the!gap!widened.!Public!stock!developed! slower!until!2007,!but!during!the!financial!crisis!growth!rates!have!been!higher!than!for! GDP.!Since!2012!the!gap!decreases!between!GDP!and!public!capital!stock!and!in!2015!GDP! growth!overtake!the!public!capital!stock!again.!It!can!be!assumed!that!in!the!early!crisis! years,!public!investments!protected!the!total!capital!stock!from!declining.! 0 100 200 300 400 500 600 700 800 900 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 bn(EUR 0 200 400 600 800 1000 1200 1400 1600 1800 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 EUR ! 24! ! Figure(15:(Development(of(GDP,(capital(stock(and(public(capital(stock((2005=100).(Source:(Eurostat( (nama_10_gdp,(nama_10_nfa_fl,(gov_10a_exp),(own(calculations.( ! In!conclusion!total!investments!in!EU28!are!sufficient!to!increase!the!capital!stock,!even! though! investments! have! been! lowered!during! the! global! financial! crisis.! Taking! the! highest!investment!in!crisis!years!as!reference!point,!the!lowered!investment!accumulates! into!an!‘investment!gap’!of!EUR!13.9!bn!and!EUR!13.4!bn!respectively!for!total!and!public! investments.!It!can!be!assumed,!that!capital!stock!could!have!been!higher!without!the! crises,!the!‘investment!gap’!however!did!not!lead!to!a!decline!of!the!EU28!total!or!public! capital!stock,!estimated!with!state!budget!data!and!the!underlying!assumptions.!! While!financing!on!European!stage!can!therefore!be!regarded!as!positive,!the!situation! might!differ!in!the!EU28!member!states,!most!obvious!in!the!so-called!program!countries,! which! have! been! or! are!partly!still! supported! by! different! institutions! and! the! other! European!countries.!! Results(for(countries( Aggregated!investments!in!the!health!sector!and!derived!estimations!for!capital!stock!as! an!indicator!for!existing!infrastructure!on!EU28!level!imply,!that!health!infrastructure! develops!over!the!course!of!time,!even!though!investments!have!been!lowered!during!the! global!financial!crises.!Situations!on!country!level!however,!indicate!major!differences.!In! the!following,!we!present!summarized!results!for!the!EU28!member!states.!! 100,000 105,000 110,000 115,000 120,000 125,000 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 GDP Capital!stock Public!capital!stock ! 25! Unavailable(data( Total! investments! reported! in! National! Accounts! (ESA2010,! Eurostat,! 2018)! are! not! available! at! all! for! Croatia,! Latvia,! Lithuania,! Malta 12 .! Public! investment,! which! are! reported!in!COFOG!(Eurostat,!2018)!are!not!available!for!Germany,!Estonia,!Ireland,!Spain,! Croatia,!Cyprus,!Latvia,!Lithuania,!Malta,!Poland,!Slovenia.!! Investments(2005-2015( In! 2005! the! highest! amounts! per!capita! have! been! invested! in! LU,! DE!and! AT.! In! the! following! years! until! 2015,!which! include! the! period! of! the! global! financial! crisis,! the! annual!investments!for!health!infrastructure!went!down!in!five!countries!(Greece,!Italy,! Cyprus,! Luxembourg,! United! Kingdom).! In! 18! countries! we! can! observe! a! positive! development! of! investments.! While! the! growth! rates! are! below! GDP! growth! in! six! countries! (Bulgaria,! Germany,! Estonia,! France,! Poland,! Romania),! investments! grow! stronger!than!the!average!economy!(GDP)!in!12!countries!(Belgium,!Czech!Rep.,!Denmark,! Ireland,! Spain,! Hungary,! Netherlands,! Austria,! Portugal,! Slovenia,! Slovakia,! Finland,! Sweden).!! ! Figure(16:(Investment(in(health(infrastructure(per(capita(and(by(country(for(2005(and(2016.(Gross( fixed(capital(formation.(Real(volumes.(Inflation-adjusted(with(implicit(deflator((2010(=(100).(Source:( Eurostat((nama_10_nfa_fl,(demo_pjan),(own(calculations.( ! !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! ! 12 !In!ESA2010!unavailable!data!are!an!issue!for!more!countries.!With!OECD!STAN!Database!for!Structural! Analysis!missing!data!have!been!replaced.!! 0 50 100 150 200 250 300 350 LU DE AT DK NL BE SE IT FR IE EU28 FI UK ES CZ SI CY EE SK PT HU PL BG EL RO EUR 2005 2016 ! 32! ! Figure'23:'capital'stock'p.'capita'(x-axis)'vs.'standardised'death'rate'by'residence'(y-axis).'Source:' Eurostat,'own'calculations' ! Figure' 24:' capital' stock' p.' capita' (x-axis)' vs.' infant' death' rates' (y-axis).' Source:' Eurostat,' own' calculations.' ' Even!though!health!services!are!in!general!seen!as!pubic!good,!which!should!be!provided! by!the!state,!some!expenditure!need!to!be!made!out!of!pocket,!the!amount!however!differ! between!states.!Showing!the!proportions!of!total!health!expenditures!(in!%!of!GDP)!in! comparison!with!capital!stock!volumes!show!that!the!fraction!decreases!with!increasing! capital!stock!per!capita!volumes.!It!can!be!assumed!however,!that!amounts!which!have! been!spend!out!of!pocket!for!health!services!might!be!higher!in!total!numbers,!since!high! levels!of!capital!stocks!are!related!with!high!economic!power!in!the!same!countries!and! therefore!high!GDP!rates.! EU28 BE BG CZ DK DE EE IE EL ES FR IT CY LU HU NL AT PL PT RO SI SK FI SE UK 0 200 400 600 800 1000 1200 1400 1600 1800 0500 1000 1500 2000 2500 3000 EU28 BE BG CZ DK DE EE IE EL ES FR IT CY LU HU NL AT PL PT RO SI SK FI SE UK 0 1 2 3 4 5 6 7 8 9 10 0500 1000 1500 2000 2500 3000 ! 33! ! Figure' 25:' capital' stock' p.' capita' (x-axis)' vs.' Private' household' out-of-pocket' expenditure' as' a' proportion'of'total'health'expenditure.'Source:'WHO'(HFA_584'6860),'own'calculations.' ! Further! information! can! also! be! retrieved! from! performance! parameters! on! infrastructure!level.!High!numbers!of!available!(hospital!and!day!care)!beds!(per!100,000)! are!reported!for!countries!with!low!capital!stock!volumes!(<!EUR!1,000)!and!for!countries! with!more!than!EUR!1,500.!In!DE!(828)!and!AT!(765)!exceptional!high!numbers!of!beds! are!provided,!both!countries!with!high!capital!stock!per!capita!volumes!(figure!23).!This! U-shape!regarding! availability! is! also! given! for! the! number! of! hospitals! per! 100,000! capita.!The!supply!is!particularly!high!for!Cyprus!(9,6!hospitals),!France!(5,3),!Finland! (4,8)! and! Bulgaria! (4,7).! The! high! numbers! of! hospitals! per! 100,000! capita! in! CY! are! mostly!given!because!of!the!high!numbers!of!private,!for!profit!hospitals!(figure!25)!Thus! the!provision!with!hospitals!and!(hospital!and!day!care)!beds!is!rather!low!in!countries! with!moderate!capital!stock!volumes.!The!supply!with!other!technical!equipment!(e.g.!CT,! MRI,! Mammographs,! radiation! therapy! equipment)! does! not! seem! to! depend! on! high! capital! stock! volumes! either! (figure! 24).! In! general,! CTs! count! the! highest! in! most! countries,!while!more!Mammographs!than!CTs!are!available!in!FI,!CY,!SI,!EL,!HR!and!MT.! Regarding!human!resources!two!observations!can!be!made.!The!number!of!physicians!per! 100,000! capita! varies! regardless! of! the! capital! stock! per! capita! volumes! between! 73! physicians!(Belgium)!and!279!(Austria),!whereas!the!number!of!nurses!and!midwives!(in! hospital)!per!100,000!capita!is!rather!high!if!countries’!capital!stock!volumes!are!high!as! well.!! RO LU DE AT DK BE NL IE IT FI EU28 UK ES SI HU EE SK PT PL 0 10 20 30 40 50 60 70 80 90 100 0500 1000 1500 2000 2500 3000 ! 34! ! Figure'26:'Capital'stock'and'purchasing'power'parities'vs.'infrastructure'and'human'recourse'parameter.'Source:'WHO,'Eurostat,'own'calculations.' 0 10 20 30 40 50 60 70 80 90 100 0 500 1000 1500 2000 2500 3000 LU DE AT DK BE SE NL FR IE IT FI EU28 UK ES CY SI CZ HU EE SK PT PL EL BG RO LT LV MT HR EUR capital!stock Purchasing!Power!Parities total!beds!p!100000 physicians!in!hospitals!per!100000 nurses!and!midwives!in!hospital!per!100000 hospitals!per!100000 Female!life!expectancy!at!birth Male!life!expectancy!at!birth ! 35! ! Figure'27:'Capital'stock'and'purchasing'power'parities'vs.'technical'equipment.'Source:'WHO,'Eurostat,'own'calculations. 0 1 2 3 4 5 6 7 8 9 10 0 500 1000 1500 2000 2500 3000 LU DE AT DK BE SE NL FR IE IT FI EU28 UK ES CY SI CZ HU EE SK PT PL EL BG RO HR LV LT MT EUR capital!stock Purchasing!Power!Parities CT!per!100,000!2013!some!2014!italy!2012 MRI!per!100,000!2013!some!2014,!italy!2012 Mammographs!per!100,000!2013!some!2014,!italy!2012 Radiation!therapy!equipment!per!100,000!2013!some!2014,!italy!2012 ! 36! ! Figure'28:'Hospitals'in'EU28'countries'by'service'provider.'' ! Benchmarking'' In!conclusion,!only!weak!to!moderate!relations!between!countries’!capital!stock!volumes! and! performance! variables,! either! subjective! (survey),! regarding! outcome! (life! expectancy! and! death! rates)! or! service! supply! (hospitals,! beds,! technical! and! human! resources)! can! be! identified.! For! hospitals! and! the! number! of! beds! a! U-shape! for! the! supply!can!be!observed,!meaning!that!high!supply!is!given!in!countries!with!high!and!low! capital! stock! volumes.! It! can! be! assumed! that! the! numbers! of! beds! and! hospitals! are! intercorrelated.!Additionally,!a!minimum!capacity!might!be!considered!when!planning! new!hospitals.!Then!again!population!movements!can!lead!to!a!situation!where!hospitals! (and! beds)! capacity! are! available! for! the! population! situation! of! passed! times,! but! infrastructure!have!not!been!adapted,!e.g.!by!dismounting!or!retirement.!! It!appears!from!outcome!parameters,!e.g.!life!expectancy!and!death!rates,!that!a!capital! stock!volume!of!EUR!1,000!might!be!a!minimum! for!good!or!at!least!sufficient!health! service!supply.!By!visual!evaluation!life!expectancy!and!death!rates!are!correlated!with! the!existing!capital!stock!volumes!below!EUR!1,000!per!capita,!however!there!might!be!a! mediation!effect!by!lifestyle!as!well.!Whereas!after!exceeding!a!threshold!of!EUR!1,000! per!capita,!the!relationship!is!less!obvious.!Variance!in!the!capital!stock!might!depend!on! different!policies.! In!a!longitudinal,!intra-country!perspective!the!recent!global!financial!crisis!was!highly! challenging! for! most! countries! in! EU28! and! globally,! such! that! some! countries! !- !2 !4 !6 !8 !10 LU DE AT DK BE SE NL FR IE IT FI EU28 UK ES CY SI CZ HU EE SK PT PL EL BG RO public!hospitals!per!100.000 for!provit!private!hospitals!per!100000 non!profit!private!hospitals!per!100000 unkown ! 37! experienced! a! reduction! of! infrastructure! investments,! e.g.! in! the! health! sector.! Some! countries!responded!with!a!Keynesian!financial!policy,!increasing!public!investments!to! stimulate!national!economy.!Beside!the!fact,!that!an!investment!gap!can!be!observed!for! almost!all!EU28!countries!and!therefore!also!on!aggregated!level,!the!capital!stocks!have! been! maintained! or! even! improved! in! most! countries.! Only! in! Greece! and! Cyprus! a! reduction!of!capital!stock!volumes!occurred.!Investments!in!Hungary!and!Italy!have!been! reduced! as! well,! however! capital! stocks! are! stable.! Given! the! numbers! for! existing! infrastructure!(hospitals,!beds!and!technical!resources),!the!quantity!is!comparable!with! the! other! EU28! countries,! while! no! assertions! can! be! made! regarding! the! quality! of! existing!infrastructure.!! The!same!applies!generally!to!all!results!in!this!paper:!Even!if!investments!and!capital! stock! volumes! appear! sufficient! from! a! macro! perspective,! it! might! be! the! case! that! investments!and!an!increase!of!capital!stock!volumes!derive!from!e.g.!additional!hospital! buildings,! while! existing! infrastructure! degrade,! such! that!a! gap! in! supplies! occur! nonetheless.! Thus,! political! choices! (pork! barrel! spending,! prestige)! and/or! business! requirements!of!investors!(location!factors,!return!expectations)!need!to!be!considered! as!well.!! EU28'future'scenarios' In!the!following!we!run!two!future!scenarios,!based!on!2016!capital!stock!volumes!for! EU28.!The!first! (ambitious)!scenario!claims,!that! investment!grow!with!expected! GDP! growth!rates!until!2030!(OECD,!2017),!which!implies!that!countries!are!determined!to! invest!a!certain!percentage!of!annual!GDP.!The!second!(conservative)!scenario!intends,! that! the! EU28! capital! stock! per! capita! volume! of! 2016! should! be! maintained! with! sufficient! future! investments.! Given! the,! EU28! capital! stock! in! 2016,! increasing! investments!(with!GDP!growth!rates,!which!is!approx.!2%!p.a.)!accumulate!to!an!absolute! improvement! of! 28%! in! 2030.! For! the! maintaining! of! 2016! capital! stock! volumes,! an! immediate! reduction! of! investments! by! 12,4%! could! be! realized,! while! the! estimated! population! decline! lead! to! further! reduction! in! the! course! of! time.! From! a! per! capita! perspective!the!first!scenario!implies!an!increase!of!24.2%!of!the!capital!stock!per!capita! volumes!by!2030,!while!the!second!scenario!lead!to!maintained!capital!stock!levels!by!its! assumptions.!! ! 38! !Because!of!future!challenges!and/or!the!fulfilment!of!the!SDG,!it!might!be!necessary!to! invest!even!more!than!just!the!given!constant!proportion!of!GDP.!On!the!other!hand,!new! technologies,!even!though!they!do!not!come!by!no!cost,!could!generate!alternatives!for! cost-intensive! infrastructure! (specially! equipped! ambulance! vehicles! vs.! hospital! buildings!in!rural!areas),!such!that!infrastructure!investments!in!total!could!be!reduced! in!the!long!term.!! ! Figure'29:'EU28'investment'and'capital'stock'(bn'€)'with'future'investment'scenario'I'&'II.'Real' volumes'EU28'aggregate'does'not'include'investment'data'from'Croatia,'Latvia,'Lithuania,'Malta.' Average' GDP' growth' rate' 2015-2030:' 2.23%.' Source:' Eurostat'(nama_10_nfa_fl,' demo_pjan,' proj_15npms),'own'calculations.' ! Figure'30:'EU28'investment'and'capital'stock'per'capita'(€)'with'future'investment'scenario'I'&'II.' Real' volumes' EU28' aggregate' does' not' include' investment' data' from' Croatia,' Latvia,' Lithuania,' Malta.'Average'GDP'growth'rate'2015-2030:'2.23%.'Source:'Eurostat'(nama_10_nfa_fl,'demo_pjan,' proj_15npms),'own'calculations.' 0 200 400 600 800 1000 1200 0 20 40 60 80 100 120 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 bn'EUR bn'EUR capital!stock future!capital!stock!I future!capital!stock!II past!investment future!investment!I future!investment!II 0 200 400 600 800 1000 1200 1400 1600 1800 2000 0 20 40 60 80 100 120 140 160 180 200 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 EUR EUR capital!stock future!capital!stock!I future!investment!II past!investment future!investment!I future!capital!stock!II ! 39! As!mentioned!before,!the!public!capital!stock!in!EU28!is!approx.!56%!of!total!capital!stock.! Since! public! investments! are! relatively! higher! compared! to! total! investments,! public! capital!stock!accumulated!to!additional! 28.8%! of!capital!stock!volume!in! 2030,!which! would!imply,!that!ceteris!paribus!the!share!of!public!capital!stock!volumes!in!total!capital! stocks!increase!a!little.!The!capital!stock!per!capita!volume!improves!with!25%.!For!the! conservative!second!scenario,!11.4%!less!investment!would!be!needed!immediately!to! maintain!2016!capital!stock!per!capita!level.!! ! Figure'31:'EU28'public'investment'and'public'capital'stock'(bn'€)'with'future'investment'scenario' I' &' II.' Real' volumes' EU28' aggregate' does' not' include' investment' data' from' Germany,' Estonia,' Ireland,'Spain,'Croatia,'Cyprus,'Latvia,'Lithuania,'Malta,'Poland,'Slovenia.'Average'GDP'growth'rate' 2015-2030:'2.23%.'Source:'Eurostat'(gov_10a_exp,'demo_pjan,'proj_15npms),'own'calculations.'' ! Figure'32:'EU28'public'investment'and'public'capital'stock'per'capita'(€)'with'future'investment' scenario' I' &' II.' Real' volumes' EU28' aggregate' does' not' include' investment' data' from' Germany,' Estonia,' Ireland,' Spain,' Croatia,' Cyprus,' Latvia,' Lithuania,' Malta,' Poland,' Slovenia.' Average' GDP' growth' rate' 2015-2030:' 2.23%.' Source:' Eurostat' (gov_10a_exp,' demo_pjan,' proj_15npms),' own' calculations' 0 100 200 300 400 500 600 0 10 20 30 40 50 60 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 bn'EUR bn'EUR capital!stock future!capital!stock!I future!capital!stock!II past!investment future!investment!I future!investment!II 0 200 400 600 800 1000 1200 1400 1600 1800 2000 0 20 40 60 80 100 120 140 160 180 200 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 EUR EUR capital!stock future!capital!stock!I future!investment!II past!investment future!investment!I future!capital!stock!II ! 40! Discussion'and'Outlook:' Based! on! the! presented! analysis,! we! can! conclude! that! the! proclaimed! need! for! ever! increasing!investments!in!infrastructure!is!partly!sound,!partly!cheap!talk.!Since!health,! education!and!social!housing!among!others!are!social!goods,!the!actual!demand!and!price! cannot!be!specified!the!same!way!as!for!a!normal!good.!Each!state!claims!its!responsibility! for! the! provision! of! social!goods! up! to! a! certain! amount,! because! the! good!should! be! generally!available!and!a!free!market!supply!would!not!be!sufficient!or!too!expensive!for! the!majority!of!people!(cf.!Merit!goods,!Musgrave,!199).!Conversely,!since!the!demand! cannot!be!determined,!also!the!optimal!supply!is!indeterminate.!Since!social!goods!and! high!supply!of!it!are!generally!considered!to!be!desirable,!the!call!for!further!investments! cannot! be! contradicted.! It! would! be! inopportune! for! any! politics! or! any! other! party,! dealing!with!social!goods!to!argue!the!case!for!less!investment.!! The! evaluation! of! past! investments! and! capital! stocks,! using! the! perpetual! inventory! method!(OECD,!2009)!indicate!however,!that!the!investment!gap,!as!it!is!claimed!by!e.g.! the!High!level!task!force!(Fransen,!del!Bufalo!&!Reviglio,!2017)!and!which!can!be!indeed! identified!for!the!global!financial!crisis!from!2008!onwards,!has!not!lead!to!a!decline!of! capital!stock!volumes!in!EU28.!Since!some!countries!have!been!more!affected!(program! countries)! than! others,! the! inter-country! perspective! lead! to! differentiated! considerations.!In!general,!the!situation!is!not!as!bad!as!often!proclaimed,!at!least!from!a! macro!perspective.!! It!is!undeniably!true!and!have!been!reported!multiple!times,!that!existing!infrastructures! decompose,! because! it! has! not! been! sufficiently! maintained.! At! the! same! time! new! infrastructure! has! been! build,! such! that! investment! and! capital! stock! volumes! as! an! operationalization!for!existing!infrastructure!improve!favourably!on!the!macro!level,!even! though!on!the!ground!poor!conditions!of!infrastructure!might!be!reported!by!politicians,! media!and!the!inhabitants.!In!the!next!round,!however,!beside!of!the!older!infrastructure! also! the! new! infrastructure! is! in! need! of! preservation! works! and! corresponding! investments.!! The! analysis! also! shows,! that! performance! variables! are! only! weakly! related! to! the! existing!capital!stock!volumes.!That!indicates,!that!‘the!more!the!better’!claim!does!not! hold!and!instead!a!good!or!at!least!sufficient!health!service!can!be!also!provided!with! lower!levels!of!infrastructure.!We!identified!a!capital!stock!per!capita!volume!of!EUR!1,000! as!the!point,!above!which!life!expectancy!and!(standardised!and!infant)!death!rates!do!not! ! 41! differ!significantly.! Also,! higher! volumes! of! capital! stock! do!not! reduce! private! out! of! pocket!expenditures!for!health!services,!which!is!somewhat!surprising,!especially!since! health!services!as!a!social!good!are!already!taxed!financed!to!a!certain!amount.! It!can!be!assumed,!that!above!a!certain!level!of!basic!endowment!further!spending!are! mostly! invested! for! an! increase! of! quality! of! health! services,! e.g.! advanced! technical! equipment! or! specialized! care,! which! formally! improve! the! country’s! overall! health! service.!Depending!on!the!underlying!strategy!it!might!happen!in!the!next!round,!that!by! all!appearances,!the!health!system!performance!is!high,!but!the!perceived!or!effective! quality,!e.g.!for!standard!treatments!is!low.!In!this!situation,!stakeholders,!e.g.!politicians! or!institutions!would!speak!up!for!further!investments!to!remedy!the!problem!with!bad! health!services.!This!situation!would!be!predestined!for!a!further!increase!of!disparity! between!talking!and!action,!which!is!a!common!behaviour!in!institutions!and!politics,! since!the!“hypocrisy”!(continual!underinvestment)!helps!to!stabilize!the!institution!and! justify!its!existing!(Brunsson,!1989).! In!summary!it!is!possible!to!identify!countries,!regions!and!segments!of!service,!which!are! in!need!for!further!investments!to!improve!the!provision!of!health!services!in!general,!or! where!less!could!be!invested.!A!first!step!could!be!to!increase!capital!stock!volumes!up!to! EUR! 1,000! per! capita! for! every! European! country.! At! the! same! time! the! allocation! of! investments!is!crucial!as!well.!It!is!likely!that!politicians!and!other!stakeholders!would!like! to!allocate!investments!in!prestigious!projects,!while!the!general!public!might!be!in!need! for!sufficient!health!services.