# **1. Introduction**

That modern infrastructure is a prerequisite for economic development seems almost a truism and one that is widely accepted by politicians around the world. However, rigorous measurement of the causal relationship between infrastructure and development has proved challenging for economists, due to methodological difficulties in unravelling the direction of causation exacerbated by significant data limitations. Attempts to answer this question began in the 1980s and relied primarily on high-level cross-country panel data econometrics incorporating rather coarse proxies for infrastructure quantity (and sometimes) quality (Straub, 2008). Since 2010, however, there have been significant methodological innovations as well as new sources of data, spawning an unprecedented volume of empirical microeconomic research often exploiting economic geography approaches and spatially granular data. This second wave of literature provides a much more parsimonious analysis of the specific channels through which specific types of infrastructures contribute to specific dimensions of the development process. It has also resulted in a notable expansion in the volume of studies available that look specifically at the developing world.

The purpose of this paper is to provide a systematic qualitative overview of this more novel microeconomic literature covering over 300 research papers focusing primarily on specific infrastructure sectors, especially in developing countries. While the dataset covers studies conducted between 1983 and 2022, more attention is given to the period since 2010, during which an increasing volume of studies has looked at how different types of infrastructure drive microeconomic development outcomes. As such, it is the most substantive effort of its kind to date. The paper is targeted primarily at development practitioners, and hence the emphasis is on surfacing the insights these papers provide regarding the underlying processes through which infrastructure drives development outcomes. These include household welfare, employment, and human capital, as well as firm-level productivity, output, job creation, and trade; but, also, the impact on spatial patterns of economic activity in the urban and rural spheres. Such insights are relevant to inform the selection and design of investments and policy interventions. A forthcoming companion paper (Foster et al, 2023)<sup>1</sup> reviews the same body of literature from a more quantitative perspective, conducting an econometric meta-analysis to define the magnitude of impacts that emerge from the literature, and pinpoint the contextual and methodological factors that drive the empirical results.

The remainder of the paper is structured as follows. Section 2 describes the methodological framework and selection criteria for papers, providing a brief overview of the literature coverage.

> 1 The two companion papers are based on the same initial database with some different selectivity criteria between this paper and Foster et al (forthcoming, 2023). The latter focuses on a subset of papers reporting infrastructure elasticities as well as considers additional papers focusing on elasticities.

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