# **I. Introduction**

Writing the introduction to a survey on infrastructure and development sometimes feels like an impressionistic exercise, especially if it is mostly policy oriented. Indeed, one feels compelled to start by painting an overview of the state of infrastructure sectors in developing countries, in particular with respect to existing stocks, households and firms access to services, and past and present investment figures. However, one quickly realizes that on all these issues, at best only patchy information is available, ending up with a number of stylized facts that do not completely fit together, information holes that can’t be filed, time series that stop ten years ago, etc. So while most practitioners and people living in developing countries know about chronic infrastructure deficiencies, and it is possible to appeal to statistics showing cruel deficiencies in sectors such as sanitation, water or electricity, there is no completely satisfying way to systematically document the state of infrastructure in and across many poor countries.

The world’s number one provider of statistics on developing countries, the World Bank, has in its more than 60 years of functioning considered infrastructure as one of its top priorities. Indeed, between 1970 and 2005, infrastructure-related lending has oscillated between 1/3 and 2/3 of the Bank’s total lending.<sup>2</sup> However, researchers of the subject acknowledge that the current state of statistical knowledge is less than satisfying.<sup>3</sup> Of course, this also implies strong limitations in the quality and relevance of empirical research that can be performed.

Based on this assessment, the objective of this paper is not to be an additional survey of the theoretical or empirical literature on the subject.<sup>4</sup> Instead, it starts from a literature review of recent contributions to highlight what works and what doesn’t work when trying to understand the causal pathways between infrastructure investment and development outcomes, in order to draw conclusions along two dimensions: First, which type of research is more likely to be useful in the search for implementable policy recommendations and second, which type of data are needed to carry out such research.

More precisely, the discussion is organized around two main set of issues. First of all, it focuses on the linkages between infrastructure and economic growth on an economy wide, regional and sectoral basis. This is clearly where the bulk of contributions are found, with studies looking at the impact of infrastructure on a variety of indicators such as output level or output growth, productivity, etc., and also where a wide array of sometimes contradictory results is found. Some of the relevant questions are the relevance of infrastructure spending at different stages of development (e.g. for low and middle income developing countries, possibly taking into account other specific

> 2 Figures for 2005 indicate a total of IBRD/IDA lending of close to $8 billion. See World Bank (2006). 3 See for example Estache and Fay (2007), Briceño-Garmendia and Klytchnikova (2006) and BriceñoGarmendia, Estache and Shafik (2004) for a more detailed discussion on the main holes in the infrastructure picture.

> 4 Previous surveys include Munnel (1992), Gramlich (1994), Sturm et al. (1998), Romp and de Haan (2005) and Prud’homme (2005) among others.

3