ASi" kUCTURE FlOR DEVELOPMENT

viet Union) provide a dlear iMustration of how the
patterns of supply and demand mnposed by cenitml o . hoigifatutr
planning affect infrastructur developmenit These overboard
countries showed an extremely high trnsort and
infonUt, to nnrnn,m, niaAn
-lnn.aneWhen times are hardi, capital spending on. inraenergy
tnit own to noneconoltnic dedsions structure is the first iteni to go, and operations and
on location of production units, underpricing and mitnneaeotnds eid ept h
inefficient use of energy, and an emphasis on heavyiogerecoiccssoslhngnfatuue
industry and raw materials production). They also spndn gpe find it les politically)cosly
showed a greater reliance on rail than on road trans- tdun redtucing public employment oDr wages. Studport
thian did countries with siminlar conditions, and ins Of fiscal adjustment and expenditure reduction
on long- over short-hauil public t-ransport facilities. find that capital expendiftues are cut morfe than
Withi market reforms, the location and composition cretexpenditures widit infmtruct pir a
of demand will alter, giiga greater role in these p~~rtanghebgstedci.Moeconon-des
indus to light
~~~~~over to within. 70 pe: crret expendtures, nortwage expen
-~~~~~~~~~~~~~~~~~~~~~~rs
econoies inustr, o liht toservies sch ~dirums (which include opemations and maintedomestic
distribution, and to the diversification of nance) are cut by more than the wage bilfL
external trade. Small enterprises and consumers The dedline in investment, at.least inL the initial
will become a more important source of demand. phss snot altogether undesirable as it often in!-
These treds require cor responding modifications duces a rationaliztion and strengthiening of courtin
infrastructure, with greater attention to the qual- b' pr 0e portfolios. Cutbacks in. operations and
maintenance expenditure, however, areworrisomea
ity services. and variety of
~~A World Dank review of countmies adjustment ex-
Public spending on inf~rastructure c onstruction ~* nnnaeoea
antd maintenance. can. be a valuable'policy tool to tions and mnaintenance and a marked deteioration
providle economic stimulus durintg recessions- As in infrastructure services were common. For inlong
as quality and cost-effectiveness are not corn- stance. in Costa Rica during the ISO current non-*
promis!ed, labor-based approaches to infrastructure wage eqxpeditures (principally operations and
dlevelopment can also be an important instrument manuance) fell 6om 1.6 percent of GDP to a mere
for employment-intensive economic growtlh. In de-0.pirnaddesheofteainlan
tonal red network in poor to very poor condition.
ciding on public spending for infrastructure, policy-
-ecet
makers have frequently not looked sufflaiently
beyond the near-term imlpacts, and many governmernts
have been attracted to the political benefits of
the highly visible structure created. When public
spending on infrastructure is notwisely deployed, it trasportmfrastructure on an interational corridor
can crowd out more productive investent in other is. less of a problem tha are institutional consectors-
At the same time, short-term fiscal con- straints. For example, one-thdird of the time teired.
straints have often led to disproportionate cutbacks to ship height between landlocked Mai and nei-ghinm
rastructre, thereby sacrificg an important boring ports n Lo ind itogo) and Abidjan CoCte
impetus to renewed growth following adjustment d'Ivoire) is, due to delays in customs clearance. Re-
(BoX 1o3).
moving inefficient regulation of rad transport and
Sometimes the least-cost approach to imiproving privatizing tranport operations, and deregulating
thei supply of infrastructure services would require power generation and'distribution (as discussed in
interegional (cross-country) iutegration of infra- later chapters), may facilitate some interational exstructure
networks, for example, power grids. Such change of services in these sectors.
an agreement would call for not only coordination To summarize, itfrastructure investment is not
of investnewts but, equally important, cooperation sufficient on its own to generte sustained increases
to maintain-efficient policies governg the trade in in economriic growth. The demnand for infrastructur
serces. Most countres, however resist dependig services is itself sensitive to economic growth,
on others for a supply of services deemsied to be of which is notoriously difficult to predict The ecostrategic
importance; therefore, importing power to. noric impact of infastructure investment vmit es
meet the base load demand is less acceptable than not only by sector but also by its design, location,
acquirig only peak load from abroad. Interational and timeliness. The effectveness of inofastructure
agreements have been more cornmmon for cross-bor- investment-whether it provides the kind of serder
ansport, which is a particularly important vices valued by usei (responding to "effective de--
nsse for landlocked counties. Often the quality of
-depends on charactedstics such as quality
19