Distributional Implications of Alternative Financing of Physical Infrastructure Development

As argued in the introductory chapter of this volume, there is a compelling economic growth argument for much greater investment in physical infrastructure in virtually all developing countries and in many developed countries. Yet asserting a need to expand physical infrastructure does not directly engage the issues of poverty alleviation and equity. In addition to the question of the volume of investment are the questions of who bears the burdens of financing these investments, and who reaps the benefits. These questions are important because, in any given context, the available modes of financing can make a substantial difference in the distribution of burdens and benefits. Although the consequences of different financing options are too context-specific to permit broad generalizations about the distributive superiority of one option over another, outlining the taxonomy of these modes, and the considerations that determine their distributive implications, can be very helpful for planners and policy-makers.