Infrastructure: What Can the Economists Say?

Abstract

Infrastructures have been traditionally built, maintained and operated by the public sector. Road and railway networks, energy, electricity and water were traditionally designed in public sector headquarters in many countries until the eighties. Since then, and due to fiscal crisis and public sector inefficiencies, among other factors, privatization is a key ingredient of the industrial policy all over the world.

Technological change and the analysis of economists have modified the conventional view which assimilated infrastructure and public monopoly. Technological developments explain part of the change in the telecommunication markets. Moreover, the economic analysis showed that the electricity sector, railways or ports had several activities which could be unbundled as a way to introduce competition.

One of the field which has attracted the attention of economic research in the last two decades is the contribution of public infrastructure to economic growth, though economists had been investigating long time before how to assess investment projects in public infrastructure, or how should prices be set in the context of long live assets, sunk costs, congestion and externalities

This paper provides a broad overview of the economics of infrastructure.

Note: The Downloadable document is in Spanish.

Keywords: Infraestructure, utilities, regulation cost-benefit analysis

JEL Classification: D61, H41, K23, L52, L91, L97