Does Infrastructure Mitigate the Effect of Urban Concentration on Poverty in Developing Countries?

The paper focuses on a poorly investigated issue, although highly challenging for developing countries, which is the nexus between urban concentration, poverty and infrastructure. A system of equations is estimated including poverty, urban concentration and growth as dependent and explanatory variables, distinguishing poverty in rural and urban areas and considering infrastructure as potentially affecting each endogenous variable. The results show that urban concentration is associated with higher poverty in both rural and urban areas and higher national income growth. In turn, a higher income is associated with lower poverty in both urban and rural areas. Road infrastructure is associated with lower poverty in both areas and ICT infrastructure significantly increases income growth. Paved roads significantly reduce urban concentration. The net effects on poverty are computed via simulations. The latter shows that the contributions of the ICT infrastructure to national poverty and to the urban-rural poverty gap reductions are positive and significant but much lower than the one of “paved roads”.