Infrastructure Investment and Interregional Development

Abstract

There has long been a great deal of interest in the relationship between public investments in infrastructure and interregional development. Although the spatial impacts of investments in transportation networks, electricity, water supply, sanitation, and telecommunications on development are assumed to be positive, there has been no clear consensus on their magnitude or scope. This article surveys the theoretical and empirical literature on sectoral and social development with respect to the availability of infrastructure. There are three main results. First, the developmental impacts of infrastructure investment turn out to be modest but positive on all aspects of development. Second, there needs to be a sufficient level of productive activity to take advantage of the complementary relationships, and no amount of investment in core infrastructure is capable of overcoming disadvantaged locations. Third, because the relationship between investment and growth is interdependent, development pressures may be efficient investment triggers. These findings suggest an analytical framework that can be used in planning infrastructure investments to advance interregional development goals.