The Cost of Road Infrastructure in Low and Middle Income Countries

Abstract

The connections between transport infrastructure and economic development have been extensively analyzed in previous research, but little is known about the cost of infrastructure investments in poor countries. This paper examines drivers of unit costs of construction and maintenance of transport infrastructure in low and middle income countries, and documents that: (i) there is a large dispersion in unit costs for comparable road work activities; (ii) after accounting for environmental drivers of costs, residual unit costs are significantly higher in conflict countries; (iii) there is evidence that costs are higher in countries with higher levels of corruption; (iv) these effects are robust to controlling for a country's public investment capacity and business environment. Our findings have implications for governments aiming to increase connectivity in poor countries.

Transport Policies and Development

“…Obtaining funding for transport infrastructure investments is difficult in contexts of scarce resources and limited fiscal capacity (Sperling & Claussen, 2004). This is exacerbated by the fact that construction of infrastructure is particularly costly in developing countries given non-competitive procurement (Estache and Iimi, 2009) or corruption (Collier, Kirchberger, & Söderbom, 2015). Today, in addition to using government resources and borrowing, there is an increasing emphasis on leveraging funds through public-private partnerships (see Trebilcock & Rosenstock, 2015).…”

Assessing the effect of public capital on growth: An extension of the World Bank Long-Term Growth Model

“…9 Here, one can interpret 1/ t N as the dollar cost of providing an extra dollar of usable public capital. Hence, corruption or other rent-seeking which reduce the quality of public investment effectively increase the cost of a given increase in the productive capital stock as found empirically by Olken (2007) and Collier et al (2015). θ t is the average efficiency of existing public capital (rather than the efficiency of new investment).…”

Alternative Routes for a Proposed Nigerian Superhighway to Limit Damage to Rare Ecosystems and Wildlife

“…The costs of road construction vary greatly according to underlying terrain and the presence of existing road infrastructure (Collier et al, 2016). Per-kilometer costs of superhighway construction were estimated from relevant technical literature and differentiated for new road development versus upgrades to existing roads.…”

“…Per-kilometer costs of superhighway construction were estimated from relevant technical literature and differentiated for new road development versus upgrades to existing roads. Cost estimates were further differentiated based on whether new roads occurred in forested terrain (the sole mode for the proposed superhighway) or followed cleared, flatter lands, as well as whether road upgrades overlaid paved or unpaved roads, because both terrain and existing road surface are also known to influence road construction costs (Collier et al, 2016). All cost estimates were expressed in U.S. dollars because exchange rates for the Naira, Nigeria's national currency, has fluctutated markedly over time.…”