National accounting for infrastructure

This article discusses how more systematic information can be compiled about the state of the UK infrastructure. It stresses the importance of considering the stock and not just the flow of new infrastructure investment. It draws attention to the information about the balance sheet that is contained for all sectors of the economy in the National Accounts, as part of their integrated stock-flow structure. While there appears to be no internationally agreed convention about the definition of infrastructure, the National Accounts information can be used to construct time series estimates for the infrastructure on a common sense view of its coverage. In constant price terms, the ratio of the infrastructure stock to gross value added appears to have risen since the mid-1990s, back towards the levels of the 1970s. But that is not true in current price terms, where the ratio remains well below the levels of the 1970s. The explanation seems to be that a relative price effect has occurred: infrastructure has become cheaper in relative terms but that has not resulted in increased infrastructure intensity. The article notes other information about the state of the UK infrastructure. As they mature, the Whole of Government Accounts should be a rich source of information. So, too, might the UK Capital Services index. Ultimately, all this information could feed into a more systematic growth accounting framework for the UK.