Investing in Rural Infrastructure

Infrastructure is best envisioned as services that come from a set of public works, not as physical facilities. In concept, infrastructure can expand rural economies by raising productivity levels, allowing expansion in the use of other resources, and attracting resources. Empirical research evidences that at the margin, the net effect of the three factors is for infrastructure to have only a modest effect on economic performance. Infrastructure investments will normally have their biggest impact in economically integrated and intermediate rural areas. Nonetheless, a basic complement of infrastructure is essential to support economic activity, but this set should be seen as accommodating rather than causing growth. Local, market-based approaches are normally the best way to develop the infrastructure and to ensure that an area has the basic infrastructure that can be maintained, supported, and used effectively.