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Infrastructure in developing countries: An overview of some economic issues

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  • Dethier, Jean-Jacques
  • Moore, Alexander

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.

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Bibliographic Info

Paper provided by University of Bonn, Center for Development Research (ZEF) in its series Discussion Papers with number 123305.

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Date of creation: Apr 2012
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Handle: RePEc:ags:ubzefd:123305

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Related research

Keywords: Infrastructure; Developing Countries; Economic Growth; Regulation; Community/Rural/Urban Development; Institutional and Behavioral Economics; L9; L16; O16; O2;

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References

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  1. Engel, Eduardo & Fischer, Ronald & Galetovic, Alexander, 2008. "The Basic Public Finance of Public-Private Partnerships," Working Papers 35, Yale University, Department of Economics.
  2. Udaibir S. Das & Michael G. Papaioannou & Christoph Trebesch, 2010. "Sovereign Default Risk and Private Sector Access to Capital in Emerging Markets," IMF Working Papers 10/10, International Monetary Fund.
  3. Antonio Estache & L. Wren-Lewis, 2009. "Towards a Theory of Regulation for Developing Countries: Following Jean-Jacques Laffont's Lead," ULB Institutional Repository 2013/43903, ULB -- Universite Libre de Bruxelles.
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  8. Antonio Estache & Jose-Luis Guasch & Atsushi Iimi & Lourdes Trujillo, 2009. "Multidimensionality and Renegotiation: Evidence from Transport-Sector Public-Private-Partnership Transactions in Latin America," Review of Industrial Organization, Springer, vol. 35(1), pages 41-71, September.
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  13. Dethier, Jean-Jacques & Hirn, Maximilian & Straub, Stephane, 2008. "Explaining Enterprise Performance in Developing Countries with Business Climate Survey Data," Policy Research Working Paper Series 4792, The World Bank.
  14. Esfahani, Hadi Salehi & Ramirez, Maria Teresa, 2003. "Institutions, infrastructure, and economic growth," Journal of Development Economics, Elsevier, vol. 70(2), pages 443-477, April.
  15. Chen, Sheng-Tung & Kuo, Hsiao-I & Chen, Chi-Chung, 2007. "The relationship between GDP and electricity consumption in 10 Asian countries," Energy Policy, Elsevier, vol. 35(4), pages 2611-2621, April.
  16. J. M. Albala-Bertrand & E. C. Mamatzakis, 2007. "The Impact Of Disaggregated Infrastructure Capital On The Productivity Growth Of The Chilean Economy," Manchester School, University of Manchester, vol. 75(2), pages 258-273, 03.
  17. Fay, Marianne & Yepes, Tito, 2003. "Investing in infrastructure : what is needed from 2000 to 2010?," Policy Research Working Paper Series 3102, The World Bank.
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Cited by:
  1. Dethier, Jean-Jacques, 2013. "Coping with urban fiscal stress around the world," Policy Research Working Paper Series 6693, The World Bank.
  2. Inderst, Georg, 2013. "Private infrastructure finance and investment in Europe," EIB Working Papers 2013/02, European Investment Bank (EIB).

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