Poverty literature review summary : infrastructure, economic growth and poverty reduction

This note summarizes a larger literature review that looked at empirical evidence and literature regarding the direct and indirect relationship between infrastructure investment and poverty. The findings highlight the dominant impact that infrastructure investment has on economic growth and thereby on poverty. The links to growth are several including creating efficiency gains from private participation in infrastructure which positively impacts end users and taxpayers. The level and kind of investment required to reach growth rates needed to eradicate poverty differs depending on several parameters. These include level of development of the country, the maturity of its regulatory environment and the degree of competition. On average, the poorer a country, the larger the potential impact on growth from adding to infrastructure stock. The more direct impact of investing in infrastructure and facilitating infrastructure reform emerges from enabling affordable access to the poor which allows them access to markets, health and education facilities, and more time for income generating opportunities. Infrastructure also impacts the poor through creation of direct, indirect and induced jobs. The second order growth effects of investments in this sector, via provision of improved and reliable services, are the largest and affect the overall economy. The review also notes the gaps in evidence among specific sectors for their poverty impacts and point to potential areas of further research.