OECD Economics Department Working Papers

ISSN :
1815-1973 (online)
DOI :
10.1787/18151973
Hide / Show Abstract
Working papers from the Economics Department of the OECD that cover the full range of the Department’s work including the economic situation, policy analysis and projections; fiscal policy, public expenditure and taxation; and structural issues including ageing, growth and productivity, migration, environment, human capital, housing, trade and investment, labour markets, regulatory reform, competition, health, and other issues.
 

Infrastructure Investment

Links to Growth and the Role of Public Policies You or your institution have access to this content

Authors:
Douglas Sutherland, Sonia Araujo1, Balázs Égert1, Tomasz Kozluk1
Author Affiliations
  • 1: OECD, France

Publication Date
24 Mar 2009
Bibliographic information
No.:
686
Pages
78
DOI
10.1787/225678178357

Hide / Show Abstract

Investment in network infrastructure – the energy, water, transport and telecommunication networks – which performs a vital role for the functioning of the economy, can contribute to raising growth and social welfare. But more is not always better. While the paper shows that investment in the network industries has had a positive effect over and above the addition to the capital stock, there is evidence that investment in the past has sometimes been misallocated. This paper identifies the policy framework that promotes investment that is conducive to growth and ensures the appropriate use of infrastructure. Central aspects of this framework are identified as a robust decision making process, improving the selection of investment projects, the introduction of competitive pressures through the reduction of barriers to entry and vertical separation when this is appropriate. In addition, efficient investment can be promoted by the combination of regulator independence and the application of incentive regulation.
Keywords:
investment, network industry, regulation, growth
JEL Classification:
  • H40: Public Economics / Publicly Provided Goods / General
  • L90: Industrial Organization / Industry Studies: Transportation and Utilities / General
  • O40: Economic Development, Technological Change, and Growth / Economic Growth and Aggregate Productivity / General
  • Q48: Agricultural and Natural Resource Economics; Environmental and Ecological Economics / Energy / Government Policy