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Infrastructure investments in Africa: A need for a « big push »

Rim Berahab | Posted : January 09, 2018

The need for infrastructure is enhanced by the willingness of citizens to live decently through an increased access to electricity, water, roads and education. The high cost of transactions in Africa highlights the urgency to upgrade infrastructure, support the expanding economies and foster regional integration. Adequate infrastructure provision is thus considered a key prerequisite for the continent to achieve the intended objective of economic growth- and trade liberalization in particular (Ajakaiye & Ncube, 2010). From an economic perspective, public investment, particularly in infrastructure, is rather a means than an end in itself. It aims to increase private capital formation leading to wealth creation and prosperity (Agénor, Bayraktar & El Aynaoui, 2005). Several empirical studies have revealed the positive spillover effects of public infrastructure capital on the demand and supply for private inputs and outputs in the case of some industrialized countries (Demetriades & Manuneas, 2000). Conversely, in Latin America for instance, the lack of investment in infrastructure during the 1980s and 1990s, particularly in roads, telecommunications, and power generation capacity, had detrimental impacts on productivity, production costs and private investments, which in turn undermined output growth (Calderón & Servén, 2002).

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