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International Handbook on the Economics of Corruption, Volume Two

International Handbook on the Economics of Corruption, Volume Two

Elgar original reference

Edited by Susan Rose-Ackerman and Tina Søreide

A companion volume to the International Handbook on the Economics of Corruption published in 2006, the specially commissioned papers in Volume Two present some of the best policy-oriented research in the field. They stress the institutional roots of corruption and include new research on topics ranging from corruption in regulation and procurement to vote buying and private firm payoffs.

Chapter 3: Delusion, Deception and Corruption in Major Infrastructure Projects: Causes, Consequences and Cures

Bent Flyvbjerg and Eamonn Molloy

Subjects: economics and finance, economic crime and corruption, law - academic, corruption and economic crime, law and economics


Bent Flyvbjerg and Eamonn Molloy 1. Introduction The successful delivery of major infrastructure projects is increasingly vital to the global economy, with an estimated $22 trillion in projected investments to be spent in emerging economies alone (The Economist, June 7, 2008). Projected benefits include employment, the purchase of domestic inputs, improvements in productivity and competitiveness as a consequence of lower producer costs, provision of higher quality services to consumers, and environmental benefits arising from the use of new environmentally sound technologies (Helm, 2008). Yet, the track record for delivery of major infrastructure projects is poor, typically characterized by enormous cost overruns and benefits shortfalls (Merrow et al., 1988; Miller and Lessard, 2000; Flyvbjerg et al., 2003). Further, infrastructure is the third member of an ‘unholy trinity’ of high-risk sectors alongside arms and energy, suffering from substantial exposure to corruption (Transparency International, 2010). Global economic and development ambitions, therefore, rest on shaky foundations. In this chapter, we draw upon recent studies by one of the authors of this chapter (Flyvbjerg) and his research collaborators, to highlight the role of delusion, deception, and corruption in explaining the consistent underperformance of major infrastructure projects in terms of cost estimates and benefits delivery. Our focus is principally on the planning and approval phase of major projects, rather than on activities that occur at later stages of the project life cycle, post-approval. We outline the implications for policy makers, planners, and commercial organizations that plan, commission, and deliver major projects, and we identify a series...

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