Policy Research Working Paper 10343

# **Abstract**

Policy makers have long used investing in public infrastructure as a means of reducing geographical disparities and promoting growth. The goal of this paper is to provide insights to development practitioners on designing interventions to maximize the development impact of infrastructure. For this, the paper presents a systematic qualitative overview of the literature, covering more than 300 studies conducted between 1983 and 2022, focusing on specific infrastructure sectors, namely digital, energy, and transport. The study also considers various dimensions of development impact, including output and productivity, poverty and inequality, labor market outcomes, human capital formation, and trade, to develop a nuanced understanding of the mechanisms through which infrastructure contributes to these development outcomes, focusing on low- and middle-income countries. As such, it is the most substantive effort of its kind to date. Overall, despite some mixed results, the overwhelming balance of evidence suggests that infrastructure improvements are critical in supporting the development process. Studies on digital infrastructure show that firm productivity, employment, and welfare increase with the arrival of broadband internet coverage. In addition, the availability of mobile phones improves coordination between producers and traders and hence reduces the price dispersion of agricultural products. Turning to rural electrification, significant literature documents the positive impact of infrastructure on household welfare, structural transformation, and human capital formation through increased labor force participation, more time spent on education, and increased indoor air quality. Investments in the reliability of power supply also contribute to firms’ productivity. However, studies based on randomized controlled trials have not tended to find a substantial short-term impact in the context of dispersed rural populations. Finally, there is rich literature on various transport infrastructure-to-development linkages, particularly for rural roads and for Sub-Saharan Africa. While households’ income and consumption benefit from the existence of rural roads, highways are also found to contribute to firms’ competitiveness. Similarly, public transportation, railways, and ports have positive impacts on the development process.

This paper is a product of the Infrastructure Chief Economist Office. It is part of a larger effort by the World Bank to provide open access to its research and make a contribution to development policy discussions around the world. Policy Research Working Papers are also posted on the Web at http://www.worldbank.org/prwp. The author may be contacted at mvagliasindi@worlbank.org and ngorgulu@worldbank.org.

_The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent._ Produced by the Research Support Team