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# **Infrastructure’s interactions with the Millennium Development Goals**

A large share of foreign aid is now oriented toward achieving the Millennium Development Goals (MDGs).<sup>3</sup> Among other things these targets—endorsed by 189 countries at the September 2000 UN Millennium Summit—aim to, by 2015, halve the proportion of people living in extreme poverty, dramatically improve education and health systems, and protect the environment in developing countries. Although there is considerable policy debate on whether the goals are likely to be achieved (see Ravallion 2003), the academic debate has so far mostly focused on measurement issues.

Both the policy and the academic debates on MDGs have been a source of some frustration for infrastructure practitioners. Except for water and sanitation and to some extent telecommunications, there is a sense that the goals fail to recognize the relevance of transport and to a lesser extent energy (since rural energy was recently added as a priority) in the fight against poverty.<sup>4</sup> This is partly because there is little knowledge about the basic relationship between infrastructure coverage and household income. Only two recent studies establish this relationship: Komives and others (2001) for 15 countries around the world and Estache and others (2002) for Latin American countries.<sup>5</sup> The frustration among practitioners has not been met by academics. Indeed, while there has been a lot of talk about the MDGs in the development community and many publications on the health and education goals, there has been little academic work on the water and sanitation goals or the MDG gaps.

Leipziger and others (2003) provide the first empirical analysis of the determinants of three child health outcomes related to the MDGs: the infant mortality rate, child mortality rate, and prevalence of malnutrition. Using data from Demographic and Health Surveys (DHS), the authors go beyond the traditional cross-country regressions of new growth theory—exploiting the variability in outcomes and explanatory variables observed between asset quintiles within countries. They show that apart from traditional variables (income, assets, education, direct health interventions), better access to basic infrastructure services plays an important role in improving child health outcomes. Their analysis of interaction effects between interventions also suggests the importance of combining interventions to achieve the MDGs.

Jayasuriya and Wodon (2003) complement those findings by demonstrating the inefficiency of policies implemented by the international community and countries themselves in trying to reach the MDGs. These concerns are increasingly being voiced by key actors in international organizations: Manning (2004) for the OECD in a speech at the World Institute for Development Economics Research, Sachs and his colleagues at Colombia University for the UN in MDG papers posted on an earmarked Website, and Bourguignon and his team at the World Bank, who are currently working on better modeling of these interactions (this is still work in progress, with no public documents yet available).

> 3 This is in close coordination with the implementation of Poverty Reduction Strategy Papers (PRSP), which drive resource allocations within many developing countries. For an interesting overview of the issues raised by PRSPs, see Booth (2003) in his introduction to a special volume of the _Development Policy Review_ on PRSPs. 4 There is clear recognition of these interactions at the sector level. See, for instance, Ballar and others (2000) and Wang (2002), who examine this issue in the context of the health sector. 5 The World Bank is generating equivalent snapshots for Africa and a number of Asian countries. But data problems have been so severe that publication of the report keeps being postponed.