The Economic Impact of Infrastructure
The links between infrastructure and development are well established, including the impact of infrastructure on poverty alleviation, equality, growth and specific development outcomes such as job creation, market access, health and education. These relationships are complex and dynamic; even with respect to growth and job creation, infrastructure’s impacts are felt through multiple channels.
The Economic Impact of PPPs
The benefits of PPPs have been well recognized among practitioners. Under the right circumstances, PPPs can mobilize additional sources of financing for infrastructure. By subjecting assumptions to the market test of attracting private finance, PPPs can go some way to improving project selection. Countries with relatively long PPP histories have found that PPPs manage construction better than traditional government procurement, with projects coming in on time and on budget more often—typically attributed to the incentives created by the PPP structure. Finally, the longer-term investment perspective under PPP contracts can also help to ensure adequate maintenance and keep assets in a serviceable condition.
The World Bank Group has recently completed the first draft literature review on the empirical impact of infrastructure and PPPs on economic growth, jobs, income distribution and poverty in developing countries (link below). The review attempts to shed light on what is known, and not known, about the nature and strength of those links. It is intended as a work-in-progress and will continue to be informed by feedback from peer reviewers. This document has benefited from extensive consultation within and outside the World Bank Group.