ABSTRACT
The link between infrastructure investment and economic growth and poverty reduction in developing countries is well established. The gap between East Asia and Latin America in GDP per worker during the 1980s and 1990s grew by 90 per cent; Calderón and Servén (2002) estimate that at least one-third of this was due to lack of infrastructure investment. The contributions of basic services such as safe drinking water, sanitation, and housing and shelter to the Millennium Development Goals can be immense. For example, construction of rural roads in the Philippines has been credited with drastically increasing school enrolment and reducing drop-out rates; provision of water and sanitation facilities in schools in Bangladesh is estimated to have increased girls’ attendance by 15 per cent; access to energy sources cleaner than traditional biomass and other fuels helps reduce incidence of respiratory diseases. Moreover, infrastructure investments can act as a catalyst for new foreign direct investment (FDI). FDI managers in Vietnam, for example, indicate that 90 per cent of new investments would not have been realized without the development of National Highway No. 5 from Hanoi to Hai Phong.
