Studies in Modelling and Decision Support
Edited by M. A. Quaddus and M. A.B. Siddique
Chapter 14: Infrastructure Development as a Policy Lever for Sustainable Development
Khalid Saeed and Honggang Xu Introduction Infrastructure investment is an important expenditure instrument employed by developing country governments over the past 40 years to affect economic development (Krueger, 1992). A World Bank study examining a crosssection of developing countries shows that infrastructure typically represents about 20 percent of their total investment and 40 to 60 percent of their public investment. Although private sector participation in infrastructure services delivery is on the rise, its volume remains under 10 percent of the total annual outlay (World Bank, 1994). Since the governments in most developing countries do not have the necessary institutions to implement many ﬁscal policies to facilitate economic growth and inﬂuence income distribution, infrastructure development is often seen as an effective tool to achieve those ends, albeit its performance has varied widely (Van de Walle and Nead, 1995; Boadway and Marchand, 1995). The spread of beneﬁts of infrastructure investment has also been quite limited in most developing countries. It might even have contributed to a worsening of income distribution, which is widely recognized to be detrimental to sustaining economic growth and human security. Large farmers have been observed to receive more beneﬁt from infrastructure provision than small farmers during the early stages of development (World Bank, 1994; Van de Walle and Nead, 1995; Knudsen and Nash, 1990). The urban sector has received more beneﬁt than the rural sector (World Bank, 1994; Lipton, 1967) and the urban formal or capitalist sector has received more beneﬁts than the...
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