## Governance standards determine the volume and effectiveness of infrastructure spending

Increasing resilience in the face of natural shocks can be achieved by investing in new or improved infrastructure. The effectiveness of such public infrastructure expenditure crucially depends on, amongst other important factors, the quality of governance in a given country.

When governance standards are high, evidence suggests that authorities may be more inclined to allocate significant funding to the installation and maintenance of infrastructure. For instance, Arimah (2005) finds that municipal infrastructure spending is positively correlated with increased control of corruption in a set of 114 cities in Africa, Asia, Latin America, the Caribbean, the Middle East, and economies in transition. The study suggests that exercising strong control over corruption has the highest impact on infrastructure expenditure in African and Asian cities.

However, while significant resources are spent on the upgrading of roads, electricity systems, water, sanitation, and ICT systems, not all public expenditure necessarily translates into better service quality for infrastructure users, i.e. firms and households. “White elephant” investments are one such example: Without transparent decision-making processes and financing frameworks, large investment projects may be adopted that are considered prestigious or satisfy influential interest groups, but that do not deliver sufficient benefits to justify their costs. In such a context, improving governance in the form of greater accountability can provide an effective way to achieve better infrastructure investments (Flyvbjerg, 2009). Another implication of inadequate expenditures in transport infrastructure is that women and disabled persons face numerous restrictions to their intraurban movements. For example, the design of public transportation systems often assumes male labor patterns, prioritizing travel to and from periurban areas and city centers during “peak hours.” This factor neglects women’s engagement in domestic, informal, and part-time work in zones out of the city center, nonpeak journeys, and the disproportionate household and care burdens that require “trip chaining”—multipurpose, multistop excursions (Boulin 2006; Kunieda and Gauthier 2007; Levy 2013a, 2013b; Schmink 1986; UN-Habitat 2009).

Therefore, good governance may not only increase infrastructure investment volumes, but more importantly may also improve the effectiveness of infrastructure spending. Rajkumar & Swaroop (2008) use data from 91 countries and three years between 1990 and 2003 to investigate the relationship between governance and public expenditure into education and health. They find that public spending is significantly more effective when an index of corruption within the political system is lower and an index of the quality of a country’s bureaucracy is higher. If this result is to be extended to infrastructure investments, infrastructure spending would be more effective in delivering high service value to users if governance standards are high. Indeed, in an analysis of infrastructure in Latin America and the Caribbean, Cerra et al (2016) reach the diagnosis that fiscal policy and strong institutions are crucial for improving countries’ infrastructure networks.

# 3. What can be done to improve infrastructure reliability?

And more precisely, to what extent better governance can improve the efficiency of infrastructure spending? Analysis of government expenditures in electricity, water and transport assets in conjunction with their quality in a large panel of country suggests that infrastructure quality is strongly linked to indicators of good governance, as well as to the attention to the trade-off between investment and maintenance.

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