Infrastructure in Developing Countries: An Overview of Some Economic Issues

ZEF- Discussion Papers on Development Policy No. 165

56 Pages Posted: 8 May 2012

Date Written: April 1, 2012

Abstract

This paper surveys the main issues and controversies in the economic literature on infrastructure in developing countries. Section I reviews the evidence on the role of infrastructure in promoting economic growth. It is argued that, although infrastructure may be more important for growth than other types of capital, the exact size and form of its effect is less clear than is often assumed. Section II looks at the issue of infrastructure “needs”, estimates of which are pervasive in both the academic and policy literature. It is argued that the preoccupation with such estimates is largely misplaced. More crucial is to develop systems of infrastructure enabling competition through an appropriate market structure. Therefore, section III reviews the economic fundamentals of infrastructure and the available market structure options and section IV considers means to attract and enable private investment. This is an important means of encouraging competition which has been amongst the top priorities of multilateral banks such as the World Bank or the European Investment Bank. Finally, section V reviews some of the literature debating whether public investment is fundamentally more cost-effective than private investment in infrastructure. There has been renewed interest in this question since the onset of the 2008 global financial crisis, with many countries now seriously questioning the rationale of replacing public with private finance.

Keywords: Infrastructure, Developing Countries, Economic Growth, Regulation

JEL Classification: L9, L16, O16, O2

Suggested Citation

Dethier, Jean-Jacques and Moore, Alexander, Infrastructure in Developing Countries: An Overview of Some Economic Issues (April 1, 2012). ZEF- Discussion Papers on Development Policy No. 165. Available at SSRN: https://ssrn.com/abstract=2054668

Jean-Jacques Dethier (Contact Author)

World Bank ( email )

1818 H Street, N.W.
Washington, DC 20433
United States

HOME PAGE: http://econ.worldbank.org/staff/jdethier

Alexander Moore

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

Register to save articles to
your library

Register

Paper statistics

Downloads
559
Abstract Views
2,690
rank
49,263
PlumX Metrics