ASi" kUCTURE FlOR DEVELOPMENT

- - Infrastruckure's roleand record
Box1 What is infrastructure?
T.-lhis Report focuses on co,wmki infrnslnsctuT and The adequacy of infrastructhre helps detemiine one
includes services fro . - country's success and another's failure-in diversi-
-Public utilities-power, telecommunications, fying production, expanding trade, coping with
..piped .water supply, sanitation and sewerage, solid population growth, reducing poverty, or improving
waste collection and disposaLt and piped gas.
environmental conditions. Good infrastructure
. - ; -:*-Public :. Public
works-rloads:
wors-roads
and
and
-mapDr
maor ..
dam
dam
and
and raises
-
productivity and lowers production costs, but
. . -canal vworks for bimgation and drmiage .
-cana--. orks- rertriansotietors-band drainage lnterur-:- .it
*Other tranport sectors-- urban.and interurhas
to expand fast enough to accommodate
:..- ban -railways, urban transpor, ports anid -wae growth. The precise linkages between infrastructure
ways, and airports.
and development are still open to debate. However,
: Infrastructure is an umbrella term for many ac-. infrastructure capacity grows step for step with eco
t-ivties referred to as T sodil overhead. capital" b - noic output-a 1 percent increase in the stock of
such development economists as Paul Rosenstein- infrastructure is associated with a 1 percent increase
-. Rodan, Ragcnar Nurkese, and=Albert Hhs5chn,anL .. in gross domestic product (GDP) across all countries
-Neither term is precisely defined, but both encom- - (Figure 1). And as countnes develop, infrastructure
pass activities that share techmical features (such as
economies of scale) and economic features (such as must adapt to support c.hanging patterns of de
. spillovers - ; from uisers to nonulsers). -n---xmand, as the shares of power, roads, and telecommunications
in the total stock of infrastructure m-
Box 2 Main messages of World Development Report 1994
Infrmstnrchre cnn deliver major benefits in economic gowt, meeting their demands and puts pressure on suppliers
po:very aUleiaaion, and environmitntaI snstaitsabitily-b t to be efficient and accountable to user Competition can
.onlywhien-itmrovidesserurs that respond toeffective demand be introduced directly, by hlbalizing entry into activian:
d does so efficiemfy. Service is the goal and the measure ties that have no tehnological barfiers, and indirdy,
of development :m infrastructure. Major investments through competitive bidding for the right to provide ex-
.have been made in infrstructure stcks, but in too many clusive service where nauhral monopoly conditions exist
developing countries these assets are not-generating the and by liberalizing the supply of service substitutes.
quantity or the quality of services demanded. The costs * Gire userss and otl7er staktolders a strong vice and
of this waste-n foirgne economic growth and lost op- real rspvnsibility. Where infrastructure activities involve
portunities for poverty reduction and envirofnmental im-- important external effects, for good or bad, or where
provement-are high and unacceptable-
market discipline is insufficient to ensure accountability
-*. S Te cses of past poorperfornnce, antd [ise sotnr of in- to users and other affected groups, governments need to
prv pefonnance, lie in tte incentites finicJg pvider. To addrs their concerns though other means. Users and
ensure efficient, responsive delivery of infrastructure other stakeholders should be represented in the plan-
. servics incentives need to be changed throutgh the ap ning; and reguation of infrastructure services, and in
-plication of three instniments-commercial manage- some cases they should take major initiatives in design.
ment, competition, and stake] older involvement The operation, and financinroles
of governent and the private sector. must be Public-private partnerships in financngS lravepromise.
transformed as welL Technological innovation and ex- Private sector involvement in the financing of new caperimeints
with alternative ways of providing infrastruc-- pacity is growing. The lessons of this experience are that
ture indicate the folowing principles for reform:
govenumentshould start with simpler projects and gain
- Manage infrastnrdire like a. business, not a buirnm;- experience, investors' returns should be linked to project
cac. The provision of infrastructure needs to be con- performance, and any government guarantees needed
ceived and run as a service industry that responds to should be carefully scrutinized.
:customer demand. Poor performers typically have a con- Govermnenats zlri Imue a continuing, if dianged, role in
furi.on ofobjectives,littlefinancialautonomyorfinancial infmstnsccht In addition to taking steps to improve the
discipline, and no "bottom line' measured by customer performance of infrastructure provision under their di-
:satisfaction. The high willingness to pay for most infra- rect controL govenments -are responsible for creating
-structure services, even by the poor, provides greater o policy and regulatory frameworks that safeguard the in-
- portunity for user charges- Private sector involvement in terests of the poor, improve environmental conditions,
management, financng, or ownership will in most cases and coordinate cross-sectoral interactions-whether ser- -
be needed to ensure a commercial orientation in.infra- vices are produced by public or private providers. Covstructure.
ernments also are responsible for developing legal and
Introduice competition-directly iffeasible, indiretly if regulatory frameworks to support private involvement
not. Competition gives consumers choices for better in the provision of infrastructure services.
2.