Infrastructure: why it is under provided and badly managed

an article by Dieter Helm (New College, Oxford, UK) and Colin Mayer (Saïd Business School, Oxford, UK) published in Oxford Review of Economic Policy Volume 32 Number 3 (2016

Abstract

The paper records the substantial deficiencies that exist in the design and implementation of infrastructure programmes around the world. It points to three sources of failure.

The first is a failure to recognize the systems nature of infrastructure and the implication of this for the appropriate tools of analysis that should be employed in infrastructure assessments.

The second is a preoccupation with income and expenditure flows rather than balance sheets in reporting public- as well as private-sector infrastructure accounts. This has had profound and in many cases perverse implications for the ownership, funding, and operation of infrastructure.

The third is inadequate governance of infrastructure programmes to overcome the significant commitment problems that afflict both private- and public-sector providers of infrastructure.

The paper describes a set of responses that recognize the systems nature of infrastructure, the importance of balance sheets, and the need for commitment mechanisms in the private and public sectors to promote the efficient provision of infrastructure.

JEL classification: H54

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