Private Sector and Infrastructure: Overview

This overview summarizes the major policy and program choices that are available to governments seeking to achieve growth and equity objectives through infrastructure interventions. It is intended to help readers integrate the guidance provided in the infrastructure chapters of this volume that address the preparation of policies, strategies, and actions for each individual infrastructure sector.

The infrastructure chapters review the products and services that are best provided to households and firms—by government or the private sector—in the context of government regulation that allows them to function efficiently and equitably. A chapter on mining (chapter 25) is included because of the importance of governments in regulating this otherwise privately run sector; the summary recommendations for government interventions outlined here, however, apply mostly to non-mining infrastructure.

As noted in chapter 1, poverty reduction can be measured by improvements in four dimensions: economic opportunities, capabilities, security, and empowerment. Households will experience changes in these dimensions in two main ways: (1) increased consumption that results from growth in household incomes, and (2) increased access to and consumption of goods and services that are made more affordable by efficiency improvements or government actions in support of social equity objectives.

Most poor households depend for their income on private sector activities such as the sale of food and cash crops, labor, and other services. These activities are affected by the quantity and quality of infrastructure services and by the reliability of access to these services. Consequently, interventions to improve infrastructure can play a major role in poverty reduction. Other measures that can help the income-generating activities of the poor include giving support to small and medium-sized enterprises (SMEs), and labor market interventions such as training and assistance to home-based productive activities (see chapter 16, Urban Poverty).

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