Maximizing the Benefits to the Poor from Infrastructure: Programs Aimed at Increasing Growth

The weight of literature suggests that improving economic infrastructure can boost economic growth. No country has sustained rapid growth without considerable public investment in infrastructure. However, while investment in infrastructure is a necessary condition for economic growth, it is not, on its own, sufficient. Investment has to be in appropriate, wellplanned projects that are properly implemented and maintained. The broader environment must also enable conditions for growth. There is strong evidence that growth is key to longterm poverty reduction. However, to have a transformative effect on poverty, wider economic transformation that benefits the poor and shares prosperity broadly must accompany growth.

Economic infrastructure can bring direct benefits to the poor. Most significantly, the poor can benefit directly by using the services infrastructure provides, such as transport, information and communication technology (ICT), electricity and water for irrigation. Transport and ICT services allow poor people to access markets, health and education facilities. Access to clean water, sanitation and electricity has health benefits and means the poor have more time to spend on generating income. Poor people can benefit directly from jobs in constructing, maintaining and operating infrastructure.

The poor can also benefit indirectly from the spillover effects of economic growth stimulated by infrastructure services. New, cheap and reliable infrastructure services lower production and transaction costs and allow businesses to grow. The growth in economic activity and trade results in cheaper goods and services, which benefit the poor. The poor can also benefit from the jobs created by businesses that are growing and from new opportunities for self-employment generated by enhanced economic activity. The poor may also benefit indirectly as governments invest additional tax revenues generated by economic growth in public services

Publication Details

• Published: 2014
• Publisher: Evidence on Demand