EAP - The Pacific Infrastructure Challenge - World Bank (2006).pdf

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3 What’s the Purpose of the Discussion Document This discussion document is aimed at encouraging debate about the role infrastructure plays in growth and development in Pacific countries, and the opportunities and obstacles to improved infrastructure performance. This debate will help to define a strategy for infrastructure development in the Pacific region. We examine infrastructure performance in Fiji, Federated States of Micronesia (FSM), Kiribati, Marshall Islands, Palau, Papua New Guinea, Samoa, Solomon Islands, Timor- Leste, Tonga and Vanuatu. We reviewed performance in telecommunications, electricity, water and sanitation, roads, airports and aviation, and ports and shipping. The paper is structured as follows: First, we discuss the role infrastructure plays in economic growth and poverty reduction. We highlight the relationship between infrastructure and other development priorities in the Pacific (Section 4) Next, we consider how well Pacific countries are performing on key infrastructure indicators (Section 4). This section highlights the key findings from our infrastructure sector analysis in Appendix A In Section 6 we analyze why some Pacific and comparator countries perform better than others. Specifically, we question whether underperformance is influenced by countries’ defining physical, political and cultural characteristics, and differentiate this from institutional failures that result from poor policy decisions In Section 6 we assess the reasons for poor policy decisions, and put forward a decision framework for infrastructure reform Section 8 presents our preliminary analysis on the amount of investment needed to overcome the infrastructure challenge Section 9 suggests a range of discussion topics for debate Appendix A contains infrastructure sector analysis for telecommunications, electricity, water and sanitation, roads, ports and maritime services and airports and aviation Appendix B summarizes the key infrastructure indicators and data used in the report Appendix C presents a selected bibliography. 10
4 Why is Infrastructure Important for Development There are many factors that contribute to economic growth and poverty reduction. Governments must balance investment in, and efforts to improve infrastructure performance with other priorities in health, education, environmental affairs, and commercial business development. It is important to debate and establish a clear set of relative priorities for government policy in the Pacific. The purpose of this section is to consider the factors that may make infrastructure development the key priority for economic growth and overall social development. For example: Box 4.1: What do we mean by ‘Infrastructure’ This discussion document is concerned with ‘economic infrastructure’. Economic infrastructure is the construction, operation and renovation of physical structures that provide a platform for most other economic activities. It includes telecommunications, electricity, water and waste water services; roads and public works programs, ports and airports, shipping and aviation services. In addition to its obvious value for production activities, access to electricity provides a critical platform for health and education services. For example, electric lighting creates a better environment for study. Electricity is also essential for the refrigeration of medical supplies, enabling vaccination and other public health campaigns to be undertaken Access to clean water supply not only has an immediate health benefit, but also frees up the time and resources spent on coping with poor water resources for other productive activities. In many instances, women bear the brunt of coping costs, and improved access to water has the most immediate impact on women’s development Mobility of goods and people plays an important role in social and economic development, promoting gains from trade as well as exchange of knowledge. Hence, roads, ports and other transport infrastructure make a key contribution to growth Transport and telecommunications infrastructure is a necessary element of effective governance in countries with thinly spread and isolated populations. Economic studies 2 conducted for a wide range of developing countries indicate that well planned and managed infrastructure makes a strong contribution to productivity growth, and hence to growth in incomes. While no studies have been carried out specifically for the Pacific Island nations, there is no reason to believe that the outcomes would be any different. Many Pacific country governments specifically acknowledge the importance of infrastructure in their development strategies and growth policies, as shown in Box 4.2, Box 4.3 and Box 4.4. 2 Relevant studies include: “Connecting East Asia: A New Framework for Infrastructure”, ADB, JBIC, World Bank, March 2005; World Development Report 1994 “Infrastructure for Development”, World Bank 11
Page 2 and 3: The Pacific Infrastructure Challeng
Page 4 and 5: Table of Contents 1 Acronyms and Ab
Page 6 and 7: Figure 8.4: Annual Per Capita Inves
Page 8 and 9: Box 7.9: ECTEL - Regulatory Coopera
Page 10 and 11: kWh MDG MIAA MIPA MNOC MOTCA MOU MP
Page 12 and 13: 2 Executive Summary This discussion
Page 14 and 15: Fiscal, regulatory and policy decis
Page 16 and 17: Figure 2.2: Estimated Annual Invest
Page 20 and 21: Box 4.2: Improving Infrastructure f
Page 22 and 23: 5 How well are Pacific Countries Pe
Page 24 and 25: Figure 5.1: Access to Electricity 1
Page 26 and 27: Water tariffs are often too low In
Page 28 and 29: Table 6.1 shows that in addition to
Page 30 and 31: These characteristics mean that Pac
Page 32 and 33: 6.2 Challenges to Institutions and
Page 34 and 35: 6.2.2 Demographic Issues in the Reg
Page 36 and 37: These high rural populations mean t
Page 38 and 39: Figure 6.3: Comparison of Defining
Page 40 and 41: Lack of legal and regulatory suppor
Page 42 and 43: 7 Challenge: How do we Lift Perform
Page 44 and 45: 7.1.2 Poor Policy Design and Coordi
Page 46 and 47: different, some efficiency may be g
Page 48 and 49: Figure 7.1: Accountability in Infra
Page 50 and 51: Box 7.3: Expert Panels can Improve
Page 52 and 53: Some of these reforms have already
Page 54 and 55: 7.2.2 Choose an Appropriate Reform
Page 56 and 57: Box 7.5: Public Sector Reforms in t
Page 58 and 59: Pacific countries, management salar
Page 60 and 61: There are three classic types of pr
Page 62 and 63: While private sector involvement ma
Page 64 and 65: Air services would also benefit fro
Page 66 and 67: 7.2.5 Regional Coordination One opt
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8 What’s the Size of the Challeng
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Figure 8.3: Annual Per Capita Inves
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Figure 8.5: Mainlines Trend 0.600 N
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Figure 8.8: Annual Per Capita Inves
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Figure 8.11: Total Annual Per Capit
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9 How do we meet the Challenge This
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Box 9.3: Can private sector involve
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Box 9.6: How can the public sector
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The proportion of mainline access a
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Box A.2: Introducing Telecommunicat
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Universal Access Universal access r
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good example of this. The Kiwi Shar
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Figure A.7: Reported Faults per 100
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Table A.1: Institutional Indicators
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and there have been calls to recons
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A.2 Electricity Sector Analysis A s
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Figure A.10: Average Electricity Ta
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Figure A.11: Economies of Scale in
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interest rate relief on a US$9m loa
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As Figure A.14 shows, Vanuatu perfo
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Table A.3: Industry Structure and G
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Regional Cooperation in Electricity
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A.3 Water and Sanitation Sector Ana
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Figure A.17: Availability of Water
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Figure A.20: Staff per 1000 Connect
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including full operating expenses a
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Corporatization is often employed t
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operating costs, collections levels
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Figure A.25: Road Network Density v
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Federated States of Micronesia at b
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In Samoa: Samoa’s Public Works De
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Many Pacific countries already outs
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4. Domestic and Pacific Island serv
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Figure A.31: TEU Throughput Levels
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system reduces cargo handling effic
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Economies of Scale Port operations
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The landlord model is the most comm
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Fiji 84 Ports The Maritime and Port
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Apia Port has become one of the bes
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Kiribati 90 Ports The Kiribati Port
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In Shipping: Services are considere
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Figure A.36: Total Passenger Throug
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Airline Services Figure A.38 illust
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establishment period. For the offic
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Vanuatu 101 Airports Vanuatu Limite
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Samoa 104 The Samoa Airport Authori
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Institutional Arrangements in Aviat
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Summary of Aviation Analysis The Pa
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Fiji Kiribati Marshall Islands Micr
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Barbados Dominica Grenada Jamaica M
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Samoa Solomon Islands Timor-Leste T
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Samoa Solomon Islands Timor-Leste T
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“A-Z World Airports Online” www
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