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Infrastructure and regional growth

infrastructure

This World Bank research on infrastructure and regional growth uses spatially explicit models of accessibility in econometric analysis of regional growth and productivity.

Contact: Uwe Deichmann, UDeichmann@worldbank.org

 

 Research outputs 

Infrastructure, especially transport sector investments, are considered a key driver of regional economic growth. By improving access to input and output markets, lowering of transport costs enables economies of scale and stimulates agglomeration. This increases firm productivity, raises wages and improves welfare. A series of research activities in Mexico, Bangladesh, India, and Indonesia, explore the role of infrastructure in local development.

 
 Research outputs

Water hauling and girls' school attendance : some new evidence from Ghana
In large parts of the world, a lack of home tap water burdens households as the water must be brought to the house from outside, at great expense in terms of effort and time. This paper studies how such costs affect girls' schooling in Ghana, with an analysis based on four rounds of the Demographic and Health Surveys. Using Global Positioning System coordinates, it builds an artificial panel of clusters, identifying the closest neighbors within each round. The results indicate a significant negative relation between girls' school attendance and water hauling activity, as a halving of water fetching time increases girls' school attendance by 2.4 percentage points on average, with stronger impacts in rural communities. The results seem to be the first definitive documentation of such a relationship in Africa. They document some of the multiple and wide population benefits of increased tap water access, in Africa and elsewhere.

Infrastructure investments under uncertainty with the possibility of retrofit : theory and simulations
Investments in large, long-lived, energy-intensive infrastructure investments using fossil fuels increase longer-term energy use and greenhouse gas emissions, unless the plant is shut down early or undergoes costly retrofit later. These investments will depend on expectations of retrofit costs and future energy costs, including energy cost increases from tighter controls on carbon emissions. Simulation analysis shows that the retrofit option can significantly reduce anticipated future energy consumption as of the time of initial investment, and total future energy plus retrofit costs. The more uncertain are the costs, the greater the value of this option. However, the future retrofit option also induces more energy-intensive infrastructure choices, partly offsetting the direct effect of having the option on anticipated energy use. Efficient, forward-looking infrastructure investments have high potential for reducing long-term energy consumption. Particularly if energy prices are expected to rise, however, the potential for reduced energy consumption will be eroded if expectations of energy prices do not include environmental costs or future retrofit possibilities and technologies are not adequately developed.

Information communication technology and development
Rapid growth of internet use in high-income economies has raised the specter of a "digital divide" that will marginalize developing countries. Using new cross-country datasets, this research investigates two proximate determinants of the digital divide:
 internet intensity (internet subscriptions per telephone mainline), and access to telecom services.

Infrastructure improvements raise city competitiveness
This book chapter examines how the combination of city level and national infrastructure development in India improve city competitiveness, measured as the city’s share of national private investment. The supply of city-level infrastructure servicessuch as municipal roads, street lighting, water supply, and drainagehas positive effects on competitiveness. At the same time, a city’s access to inter-regional infrastructure has a much greater effect on its attractiveness for private investment. Thus, while local efforts are important for competitiveness, they are less likely to be successful in cities that are distant from the country’s main trunk infrastructure.
  • "Infrastructure and City Competitiveness in India," Somik V. Lall, Hyoung Gun Wang and Uwe Deichmann, in Beyond the Tipping Point: Benefits and Challenges of Urbanization, ed., Jo Beall, Basudeb Guha-Khasnobis, and Ravi Kanbur, UN WIDER, London School of Economics, 2009.
 

Better transport access to urban markets raises non-farm sector wages
This paper presents empirical evidence on the relative importance of farm and urban linkages for rural non-farm employment in Bangladesh. The results suggest that people are more likely to be employed in well-paid wage employment and self-employment in the non-farm sector if they are closer to urban centers. Those who are further away from such centers are even less likely to be in wellpaying non-farm jobs if they are living in areas with greater agricultural potential. The empirical results highlight the need for improved connectivity of regions with higher agricultural potential to urban centers for non-farm development in Bangladesh.
  • "Urban Proximity, Agricultural Potential and Non-Farm Employment: Evidence from Bangladesh," Uwe Deichmann, Forhad Shilpi, and Renos Vakis, World Development 37(3):645-60, 2009.
  • "Spatial specialization and farm-nonfarm linkages," Uwe Deichmann, Forhad Shilpi, Renos Vakis, World Bank Policy Research Working Paper 4611, 2008.

Large scale road sector investment could significantly increase intra-African trade
The lack of regional integration in Africa is seen as a major barrier to the emergence of regional production networks that could generate the scale economies to support export-oriented growth strategies. The poor quality of infrastructure contributes to the low level of intra-African trade in primary products, intermediates and final goods. This analysis suggests that continental network upgrading could expand overland trade among Sub-Saharan African countries by about $250 billion over 15 years, with major direct and indirect benefits for the rural poor. Financing the program would require about $20 billion for initial upgrading and $1 billion annually for maintenance.

 

Urban growth patterns in Brazil reflect regional economic dynamics
This study examines the determinants of Brazilian city growth between 1970 and 2000 using a dataset of 123 agglomerations. The main findings are that decreases in rural income opportunities, increases in market potential for goods and labor force quality and reduction in intercity-transport costs have strong impacts on city growth. Local crime and violence, measured by homicide rates impinge on growth.
  • "Determinants of City Growth in Brazil," Daniel da Mata, Uwe Deichmann, J. Vernon Henderson, Somik V. Lall and Hyoung Gun Wang, Journal of Urban Economics 62 (2), 252-72, 2007.
  • "Determinants of city growth in Brazil," Daniel da Mata, Uwe Deichmann†, J. Vernon Henderson, Somik V. Lall, and Hyoung Gun Wang, World Bank Policy Research Working Paper 3723, 2005.


Last updated: 2009-08-31




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