International Handbook on Mega-Projects
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International Handbook on Mega-Projects

Edited by Hugo Priemus and Bert van Wee

This comprehensive and accessible Handbook presents state-of-the-art research on the decision-making processes in the deliverance of mega-projects – large infrastructure projects for the transportation of people and/or goods.
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Chapter 8: The political economy of urban infrastructure

Kevin Dwarka and Eran Feitelson


Beginning in the early 1980s, the resurgence of private sector involvement in the development of infrastructure revolutionized the provision of public services (Grimsey and Lewis, 2004). Anchored by the neoliberal ideology of Reagan and Thatcher, new policy regimes crystallized around the contraction of public expenditures and the liberalization of private capital flows (Prasad, 2006). Deregulation programs transformed the way local, state, and federal governments operated and built highways, railway, power plants, and water treatment facilities (Gómez-Ibáñez, 2003;Winston, 2010; Finger and Künneke, 2011). In both the industrialized and developing worlds, the private sector expanded the scope of its services beyond engineering and construction and assumed primary responsibility for the design, operation, and maintenance of new infrastructure (Roland,2008; Grigg, 2010). The most sweeping change, however, was the financialization of new infrastructure. Countries began to sell off their infrastructure assets to private investors. Engineering firms and venture capital funds formed new infrastructure products. Infrastructure, no longer simply a public good, became bought and sold as a globally traded asset class (Torrance, 2009a; Weber and Alfen, 2010). Meanwhile, new legal frameworks like private finance initiative (PFI), design-build-operate maintain(DBOM), and build-operate-transfer (BOT) subjected service delivery to private contractual agreements rather than agency protocols and public regulation.

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