# **1 Introduction**

Infrastructure investments can support economic development through both capital accumulation and structural transformation.<sup>1</sup> Structural change—the movement of workers from lowerto higher-productivity employment—is essential to growth in low-income countries where there is a large share of employment in low productivity sectors. Trade, and economic integration more broadly, can be an important source of productivity gains and structural transformation. However poor infrastructures in low-income countries create transport and information frictions that increase the distance of economic agents relative to one another, limiting the economic specialization within and across neighboring countries. Transport improvements lead to faster journeys, making economic agents closer together, and may also trigger relocation of economic activity, increasing productivity and allowing workers to switch to more productive jobs. Electricity and Internet allow for the use of more modern productive technologies and complement transport infrastructure by boosting firm productivity. The literature has studied specific infrastructure expansions as potential drivers of development, but little work has been done on the associated structural change or whether the combinations of different infrastructures create a big push development impact. This paper investigates how investments in electricity, Internet, and transport infrastructure and their interactions affect economic development through productivity gains and structural change for three neighboring countries, Nigeria, Cameroon, and Chad.

This paper focuses on the impact of infrastructure on economic development for three countries around Lake Chad in north-west Africa, Cameroon, Chad, and Nigeria. The Lake Chad sub-region, an economically- and socially- integrated area that has been undermined by multiple and interrelated drivers of fragility, conflict, and violence, comprises an estimated 17 million to 19 million people, who are primarily involved in agriculture and fishing activities. The sub-region has one of the largest concentrations of extreme poverty in Sub-Saharan Africa. Nigeria, Cameroon, and Chad, while being at different stages of development, all face a similar challenge to generate more and better jobs through economic transformation. Employment in non-agricultural sectors is currently around 55% in Cameroon, 65% in Nigeria, and less than 30% in Chad.<sup>2</sup> The share of employment in agriculture in Cameroon and Nigeria has declined since the 1990s, while it has stagnated at high levels for Chad. Overall, the pace of structural change has remained slower than expected in the region, hence the need to understand the role of infrastructure as a potential driver for structural transformation.

Because the Lake Chad region is characterized by strong historical trade, ethnic, cultural, and political ties, which makes the areas within countries that comprise the region econom-

> 1There are two approaches for explaining economic growth (McMillan et al., 2017). The first assumes that the accumulation of skills, capital, and broad institutional capabilities are needed to generate sustained productivity growth. The second assumes a dual economy in which long-run growth is driven by the flow of resources to modern economic activities, which operate at higher levels of productivity.

> 2World Bank data, see figure A1 in Appendix .

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