# **Introduction**

The world is expected to grow<sup>at2.7%perannumin thefirstdecadeofthe new</sup> millennium. Accompanying this<sup>growthwill beanincreasein demandfor infrastructure</sup> services, for both consumption<sup>and productionpurposes.Afailuretorespondtothis</sup> demand will cause bottlenecks<sup>to growth and hamper poverty alleviationefforts.</sup> This paper sets out to estimate<sup>the changein demandfor infrastructureservices thatwill</sup> spring from the expected structural<sup>changeandgrowth in income theworld isexpected to</sup> undergo in the next 7 years. We<sup>usethe same macromodelthat linksgrowthand demand</sup> for infrastructure services that<sup>wasdevelopedinFay(2000.)Toourknowledge, this</sup> paper is the only one that systematically<sup>triestoestimate infrastructure needacrossa</sup> cross section of countries and<sup>acrossavarietyofsectors.'</sup> We then discuss the implication for investment needs<sup>across regionand incomegroups.</sup><sup>_Theword"need"is_</sup> _used here only to refer to the_<sup>_investmentnecessary to satisfyconsumer and producer_</sup> _demand based on predicted GDP_<sup>_growth.Itdoesnotrefertoanysociallyoptimal_</sup> _measure of need for infrastructure_<sup>_service or infrastructure investment._</sup> The infrastructure sectors covered<sup>inthis paperare roads, railroads,telecommunications,</sup> electricity, water and sanitation. For lack of comparable data<sup>acrosscountries,we</sup> excluded ports, airports, and<sup>canals-</sup> which represent a small share<sup>ofoverall</sup> infrastructure endowments - and<sup>oilandgas.Table1 offersaquick reviewof accessto</sup> infrastructure services across<sup>low,middleand highincomegroups, showinghow</sup> infrastructure stocks or access<sup>increasesalongwithincome.</sup> This however, varies somewhat across different types<sup>of infrastructure.For waterandsanitation, where access,</sup> by definition, is bounded at 100,<sup>accesstowaterin highincomecountriesisonly1.3</sup> times what it is in poor countries,<sup>and 2.2 times higherfor sanitation.Incontrast,the ratio</sup> for mobile phones, a relatively<sup>newtechnologyis91:1infavorof richcountries.Note</sup> finally, that for most types of<sup>infrastructure,thedifferenceinaccessbetweenpoorand</sup> rich countries is much less than<sup>the differencein income(estimated hereat about 63: 1.)2</sup>

**Table 1. Access to infrastructure**<sup>**by incomegroup -**2000</sup>

||GDPper<br>capita|Electricity<br>Generation<br>(kwpercapita)<br>|Telecomm<br>(per100<br>Fixed<br>(lines)<br>|unications<br>0person)<br>Mobile<br> <br>(subscribers)<br>|Road<br>(km/1000 <br>person)<br>|Rail<br>(km/1000<br>person)<br>|Water<br>(%ho<br>conn<br>|Sanitation<br>usehold<br>ected)<br>|
|---|---|---|---|---|---|---|---|---|
|LIC|475|116<br>|28<br>|5.8<br>|1.06<br>|0.07<br>|76.26<br>|45.58<br>|
|MIC|1,919|406|127<br>|83.7<br>|1.10<br>|0.13<br>|81.82<br>|61.87<br>|
|HIC|29,808|2,031|582|526.0<br>|10.54<br>|0.44<br>|99.59<br>|98.07<br>|
|Ratio HICtoLIC<br>Source:seeAnnex|63<br>1.|18|21|91|10|6|1.3|2.2|

' Many countries, in the course of<sup>their investmentplans, makethis kindof estimates.These may be much</sup> more accurate inasmuch as they<sup>are basedon individual countryandsector data,althoughin manycases</sup> they are more "wishlists." Also,<sup>thereare sector studiesthat typically tackle onetypeof infrastructuresuch</sup> as one on energy by Moore and<sup>Smith(1990.)</sup> 2 Note that we are not taking<sup>into account differencesin quality.Thus accessto water in high income</sup> countries usually means reliable,<sup>continuousservice,whilein manydeveloping countriesit may only entail</sup> sporadic access to water of<sup>unreliable quality.</sup>