Infrastructure: Public Policy for Private Infrastructure

Infrastructure provision was until recently widely regarded as a "natural" monopoly, implying that one provider of services could produce the service at lower cost than two or more service providers could. For that reason, infrastructure provision was typically in the hands of the government, or tightly regulated. But that began to change in the early 1980s with technological breakthroughs in telecommunications which challenged the natural monopoly idea. The 1984 break-up of the "Bell System" in the United States led to competition in the provision of long-distance services. In the United Kingdom also, limited competition was introduced in the early 1980s. Since then telecommunications monopolies around the world are slowly but inevitably being broken up. In the late-1980s, I participated in this process in an advisory role in some countries, helping outline how a competitive structure may be phased in. Some of the lessons from that work were written up and are included here.

In 1994, the World Bank's annual publication, the World Development Report, was devoted to infrastructure. A key theme of that report was greater efficiencies in infrastructure provision were possible through private provision and greater competition, not just in telecommunications but also in other major infrastructure sectors such as electric power, water, and transportation. As one of the principal authors of that report, I commissioned several excellent background papers. Since the main report was not able to reflect the richness of these papers, I edited two monographs. The first, Infrastructure Delivery: Private Initiative and the Public Good, dealt with the tension of attracting private investment in a competitive framework while maintaining an extensive public role of protecting the consumer.

The second monograph, Infrastructure Strategies in East Asia: The Untold Story, looked back to document how over a period of more than three decades, the East Asians had installed an extensive and efficient infrastructure even though planned and delivered by the public sector. A subsequent monograph, Choices for Efficient Private Participation in East Asian Infrastructure, argued that, despite past success, forces within East Asia and outside implied that a shift towards private and competitive infrastructure provision was best likely to serve the region's evolving requirements.

Most recently, I have been explored the possibilities of private provision of water and sanitation services. Water and sanitation poses important challenges on account of its interface with health and environmental concerns and typically high subsidies levels justified, often disingenuously, by the need to provide services to the poorest.

"Exploiting Competitive Opportunities in Telecommunications," Finance and Development, 32: 39-42, June 1995, with Veronique Bishop. Draws on "Exploiting new market opportunities in telecommunications."

"Exploiting new market opportunities in telecommunications," with Veronique Bishop and Mark Schankerman in Infrastructure Delivery: Private Initiative and the Public Good.

"Infrastructure Delivery: Private Initiative and the Public Good," Economic Development Series, Economic Development Institute, The World Bank, Washington D.C., November 1996, editor.

"Building on East Asia's infrastructure foundations," Finance and Development 35 (2): 22-25, June 1998, with Michael Walton. Draws on Infrastructure Strategies in East Asia: The Untold Story, The Economic Development Institute, the World Bank, Washington D.C., 1997 and Choices for Efficient Private Participation in East Asian Infrastructure, The World Bank, Washington, D.C., 1997.

"Choices for Efficient Private Participation in East Asian Infrastructure,"1997, The World Bank, Washington, D.C., editor with Harinder Kohli and Michael Walton.

"West Bank and Gaza: infrastructure, institutions, and growth," August 1996, The World Bank, Washington D.C.

"Private capital in water and sanitation," Finance and Development, 34 (1): 34-37, March 1997, with David Haarmeyer (reprinted Asia Water and Sewerage, April 1997).

"Competition, contracts, and regulation in water and sanitation," June 1998, with David Haarmeyer.