Topic Guide: Maximising the benefits to the poor from infrastructure programmes aimed at increasing growth

Abstract

This Topic Guide provides advisers with an overview of how the poor can benefit from economic infrastructure projects. It focuses on projects that principally aim to boost economic growth and industrial development. In these projects, directly reducing poverty is likely to be a secondary outcome. In addition, it examines the potential for the infrastructure associated with the extractives sector to serve broader development goals. The weight of literature suggests that improving economic infrastructure can boost economic growth. No country has sustained rapid growth without considerable public investment in infrastructure. However, while investment in infrastructure is a necessary condition for economic growth, it is not, on its own, sufficient. Investment has to be in appropriate, well-planned projects that are properly implemented and maintained. The broader environment must also enable conditions for growth. There is strong evidence that growth is key to long-term poverty reduction. However, to have a transformative effect on poverty, wider economic transformation that benefits the poor and shares prosperity broadly must accompany growth. Economic infrastructure can bring direct benefits to the poor. Most significantly, the poor can benefit directly by using the services infrastructure provides, such as transport, information and communication technology (ICT), electricity and water for irrigation. Transport and ICT services allow poor people to access markets, health and education facilities. Access to clean water, sanitation and electricity has health benefits and means the poor have more time to spend on generating income. Poor people can benefit directly from jobs in constructing, maintaining and operating infrastructure. The poor can also benefit indirectly from the spillover effects of economic growth stimulated by infrastructure services. New, cheap and reliable infrastructure services lower production and transaction costs and allow businesses to grow. The growth in economic activity and trade results in cheaper goods and services, which benefit the poor. The poor can also benefit from the jobs created by businesses that are growing and from new opportunities for self-employment generated by enhanced economic activity. The poor may also benefit indirectly as governments invest additional tax revenues generated by economic growth in public services. The objectives of this Topic Guide are to: Assess the extent to which economic infrastructure projects and programmes can create benefits for the poor; Identify measures that have been adopted to provide benefits to the poor from infrastructure projects aimed at increasing growth; and Assess the effectiveness of measures that have been incorporated in infrastructure projects with the aim of creating benefits for the poor in each of the transport, ICT, electricity and irrigation sectors. Conclusions: This Topic Guide identifies strong evidence of direct benefits to the poor across all sectors particularly relating to job creation and increased incomes. It also identifies the same indirect benefits in the transport and energy sectors. This does not mean there are no indirect benefits in the ICT and irrigation sectors, but there are significant methodological challenges to attributing indirect benefits to infrastructure development. Maximising the benefits to the poor from infrastructure projects means considering accessibility, affordability, engaging communities, information and training, and employment at the design stage. This Topic Guide has been produced by Engineers Against Poverty with the assistance of the UK Department for International Development (DFID) contracted through the Climate, Environment, Infrastructure and Livelihoods Professional Evidence and Applied Knowledge Services (CEIL PEAKS) programme, jointly managed by DAI (proudly incorporating HTSPE Limited) and IMC Worldwide Limited