Effectively Utilizing Infrastructure to Achieve Economic and Societal Growth in Developing Countries

Abstract

Developing countries can benefit economically and socially from the construction of infrastructure. However, poor policy decisions regarding investment in public goods and services often impede infrastructure’s effectiveness in achieving such benefits. This paper seeks to provide a coherent framework for developing countries to consider when planning and implementing infrastructure projects. Gathering insights and policy suggestions from various relevant studies, it proposes three factors necessary for developing countries to consider. These three factors emphasize individual quality of life and long-term development instead of simple short-term economic growth described by basic economic indicators. They also account for the social and environmental concerns or implications of infrastructure construction, often overlooked in many policy agendas. The first factor is the efficiency of expenditure and accessibility of infrastructure, achieved through the consideration of diminishing returns to scale for capital investment and an emphasis on the delivery, not just the provision, of public services; the second is resilience and sustainability in the context of local environmental attributes and regional independence during the decision-making process; the third is the maximization of indirect benefits, most notably the increases in human capital and productivity caused by infrastructure construction.