children age class and level of mother education. Galiani et al. (2006) show that the privatization of water in Argentina has significantly reduced the incidence of child mortality due to water-borne diseases and that most of this effect has been the result of an expansion in household access to the water network.

Another group of studies looks at firm-level data. Reinikka and Svensson (2002) use a survey of Ugandan firms to analyze how entrepreneurs cope with deficient public capital. They show that faced with unavailable and especially with unpredictable services, many firms invest in substitutes such as electricity generators. In that sense, poor public capital crowds out private investment. Moreover, in their sample, firms that have invested in generators invest less conditionally on public capital turning out to be not that bad. Their findings are similar to those coming out of a number of reports on investment climate assessments, such as Anas, Lee and Murray (1996) and Lee, Anas and Oh (1996) on Indonesia, Nigeria and Thailand, and Alby and Straub (2007) on eight Latin American countries. Finally, Jensen (2007) illustrates nicely in the context of south Indian fisheries how access to mobile telephony enhances market efficiency and welfare of the participants.

While household and firm survey data help solve some of the problem specific to macroeconomic data, they also generate some issues of their own. First of all, household level data, although they help identify direct effects on human development outcomes, also rule out the identification of effects on the economic activities of firms not owned at the household level. Moreover, microeconometric data have specific endogeneity problems, namely the fact that access variables cannot be considered to be exogenously determined. This arise for two reasons: endogenous service placement, because public investment decisions are likely to be affected by the expected returns and be non-randomly attributed, and endogenous placement of households and firms, as for example wealthier households or more skilled entrepreneurs may take location decisions based on the potential availability of infrastructure services. At the firm level, an alternative version of this last issue is endogenous technology choices, whereby firms faced with different quality and availability of infrastructure services would choose different technologies.<sup>42</sup> The problem of endogenous placement has been addressed in various ways. Gibson and Rozelle (2003) take advantage of the fact that highway development occurred progressively from coast to inland areas to use the timing of highway penetration in each district as an instrument for road density. However, it is clear that this strategy is only made possible by the specific geographic characteristics of Papua New Guinea. Duflo and Pande (2007) use GIS data on land inclination to instrument for dams placement choices. The issue of endogenous technological choices, a crucial one when outcomes such as economic activity indicators are considered, poses a greater challenge. Haughwout (2002) and Jacoby (2000) circumvent the problem by using local prices of either land, houses or labor as dependent variable, under the assumption that these prices reflect potential profits resulting among other things from infrastructure availability, but are not affected by technological choices. However, as signaled by Gibson (2005), it is not clear that any of these assets fully captures the present value of future profits, especially in the non-farm sector.

> 42 An attempt to address this issue in the context of ICA surveys is in Escribano and Guasch (2005).

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