The Social Rate of Return on Infrastructure Investments

Canning, David ; Bennathan, Esra

World Bank, Washington, DC

关键词: ACTUAL COSTS;    AGGREGATE OUTPUT;    BALANCED GROWTH;    BASE YEAR;    BASKET OF GOODS;   

DOI  :  10.1596/1813-9450-2390
RP-ID  :  WPS2390

学科分类：社会科学、人文和艺术（综合）

来源: World Bank Open Knowledge Repository

【 摘 要 】

The authors estimate social rates ofreturn to electricity-generating capacity and paved roads,relative to the return on general capital, by examining theeffect on aggregate output and comparing that effect withthe costs of construction. They find that both types ofinfrastructure capital are highly complementary with otherphysical capital and human capital, but have rapidlydiminishing returns if increased in isolation. Thecomplementarities on the one hand, and diminishing returnson the other, point to the existence of an optimal mix ofcapital inputs, making it very easy for a country to havetoo much - or too little - infrastructure. For policypurposes, the authors compare the rate of return forinvesting in infrastructure with the estimated rate ofreturn to capital. The strong complementarity betweenphysical and human capital, and the lower prices ofinvestment goods in industrial economies, means that therate of return to capital as a whole is just as high in richcountries as in the poorest countries but is highest in themiddle-income (per capita) countries. In most countries therates of return to both electricity-generating capacity andpaved roads are on a par with, or lower than, rates ofreturn on other forms of capital. But in a few countriesthere is evidence of acute shortages ofelectricity-generating capacity and paved roads and,therefore, excess returns to infrastructure investment.Excess returns are evidence of suboptimal investment that,in the case of paved roads, appears to follow a period ofsustained economic growth during which road-building stockshave lagged behind investments in other types of capital.This effect is accentuated by the fact that the relativecosts of road construction are lower in middle-incomecountries than in poorer and richer countries. As a rule, atendency to infrastructure shortages - signaled by highersocial rates of return to paved roads orelectricity-generating capacity than to other forms ofcapital - is symptomatic of certain income classes ofdeveloping countries: electricity capacity in the poorest,paved roads in the middle-income group. To the extent thatsuch high rates of return are not detected by microeconomiccost-benefit analysis, they suggest macroeconomicexternalities associated with infrastructure.