How and Why Does the Quality of Infrastructure Service Delivery Vary?

In this paper, presented by George R. G. Clarke at Lincoln Institute’s 2012 Conference on Infrastructure and Land Policy the author observes that access to infrastructure and the quality of infrastructure service delivery is very poor in many developing countries. This, he suggests, is a problem because studies have found that poor-quality service and weak access to infrastructure can slow development and impede growth. Improving access and quality would therefore benefit many people in developing countries. Through empirical analysis of data from a variety of sources the author seeks to answer two questions. The first concerns how the availability, quality, and price of infrastructure vary across countries. The second is how infrastructure affects the operations and growth of firms.

In his analysis the author examines the correlation between various measures of infrastructure service quality and reliability and management’s perceptions about obstacles to business development imposed by poor-quality service. He also looks at the correlation between infrastructure services and macroeconomic variables. Through his study he finds that that poor-quality infrastructure imposes substantial costs on business. He also finds that in developing countries managers are more likely to point to the reliability of electric service as a serious obstacle than to any other area of the investment climate. They were less likely to cite transportation as a serious problem.

The author concludes, as he notes previous studies have, that managers appear more concerned about infrastructure quality and reliability in low-income countries than in middle-income countries. His study suggests that this most likely is a result of the fact that the quality of infrastructure is lower in low-income than in middle-income countries. After controlling for this, he finds that the correlation between perceptions and per capita income becomes smaller and statistically insignificant. He suggests that this might not be surprising given that many measures of access and service quality are positively correlated with per capita income.

This paper was presented at the Lincoln Institute’s annual Land Policy Conference in 2012 and is Chapter 14 of the book Infrastructure and Land Policies.