The economic rate of return of infrastructures and regional policy in the European Union

This paper examines the results of cost–benefit analysis (CBA) of 200 major investment projects co‐financed in 1988–93 by the European Commission. The project database we have built is probably one of the few existing sets of comparable micro‐data on the expected rates of return of public infrastructure and on the quality of CBA leading to its calculation. The database reveals a striking dispersion of expected rates of return around the average. Part of the large sample variance is probably a consequence more of inconsistencies in the actual implementation of CBA than of structural differences among the European Union’s more economically backward regions. We offer a measurement of the quality of CBA and compare EU ex‐ante data with World Bank ex‐post data.