Why Has Not Transport Infrastructure Done More to Reduce Poverty?

Despite transport infrastructures’ potential to make a substantial contribution to poverty reduction, it has become increasingly evident that in many cases it has failed to do so. The magnitude and direction of the impact seems to depend on a number of critical factors:

1. Choice of transport infrastructure. For decades, the choice of infrastructure investment was largely driven by considerations of efficiency, with a focus on promoting output growth at the aggregate level. Poverty reduction was not a major criterion for infrastructure projects until recently, and as a result, the very real trade-offs between efficiency and equity and the possible cost of externalities were typically not factored in.

   The results of Kwon’s (2005b) study on the impact of roads in China can illustrate how the choice of infrastructure would be different depending on whether the objective is to maximize growth or to reduce poverty. The study reveals that each additional kilometer of high-class roads generates higher return to GDP than do low-class roads, but it is lowclass roads that raise far more rural poor above the poverty line per Yuan invested. From a poverty reduction standpoint therefore, it would be more strategic to invest in low-class roads, but from an efficiency and economic growth standpoint, one would come to the opposite conclusion.

   Another study by the ADB (2002a) reveals that, perhaps due to issues of affordability, the poor still inhabit a walking world, with very limited opportunities to use roads. From a poverty reduction standpoint, providing a network of tracks, paths, and culverts could prove to be a more effective strategy than building roads.

2. Policy and regulation on transport services. As Rayner (2005) emphasizes, the main benefit of transport infrastructure investment is expressed in terms of savings in operating costs, savings which are more often than not enjoyed by vehicle owners and operators. As users of transport services, the benefits have to be passed on to the poor in the form of lower fares or freight rates.

   As a general rule, the most effective way of ensuring benefits to the poor is to ensure effective competition in the supply of transport services. Unfortunately, in many developing countries, it is very common to find market entry or transport fare regulation. Market entry regulation reduces competition and lowers the incentive for operators to operate efficiently, improve the quality of services, and reduce fares. At the same time, although fare regulation is ostensibly aimed at helping the poor, in reality it tends to be regressive. The regulated fares are usually set based on operating costs at the national or provincial level, which do not reflect conditions on a specific route. As such, fares will not reflect reductions in operating costs on a specific route and the operator ends up retaining the benefit of lower operating costs (Rayner, 2005).

3. Lack of effective maintenance system. Studies of transport infrastructure in developing countries have consistently revealed chronic underinvestment in maintenance, particularly in the case of roads¹. Lack of maintenance reduces the benefit steam of infrastructure for three reasons: first, it deprives the community of a long-term source of income and employment opportunities of local labor; second, it undermines the ability of the poor to sustain any improvements in access and opportunities which the roads may have brought about in the beginning; and third, it leads to huge efficiency losses and raises numerous expenditure issues.

   Although maintenance should be a major concern in developing countries, this issue has proven to be very difficult to address, if serious attention is given to the issue at all. Part of the problem is political: typically, politicians, donors and governments tend to prefer large, flagship construction projects that attract a lot of attention. By its very nature, maintenance is an on-going process, but politicians and donors prefer activities with a clear-cut beginning and end. This attitude tends to distort the decision making process of governments (McCawley, 2005). Another part of the problem is budgetary: given limited funding resources and persistent problems in multi-year budget allocation, the governments of developing countries are often pressed to allocate among competing priorities. In the course of prioritization, it is very common for maintenance to be given a low priority, mainly because funding for it cannot be guaranteed in the long-term (Puri, 2005).

4. Existing social structure and concentration of assets. Typically, improvements in physical access are not enough to guarantee poverty reduction impact because the poor often lack assets, or they may face a number of constraints, such as access to credit or land, which prevent them from taking advantage of new opportunities (Cook, 2005, Duncan, 2005, Hettige, 2005). In the very worst case, the poor could be completely excluded from access to infrastructure because they belong to a particular socioeconomic group that is discriminated against. This is aggravated by the fact that in most developing countries, mechanisms for the poor to voice their needs or preferences are often weak, if they exist at all. Often the decision on the kinds of infrastructure and the choice of where they should be built is influenced by the local elite; the poor have very little power to influence decision-making, even at the local level.

5. Premature displacement of the informal transport sector. In rural areas, informal transport services using non-conventional vehicles/vessels such as modified agricultural equipments, motorized tri-cycles, or even non-motorized vehicles, to carry passengers and/or freight are commonly utilized by the poor. In many cases, these informal transport services are the only affordable services to the poor. Once rural roads are improved, there is a tendency in most countries to issue policies in favor of high-quality standard vehicles and discourage the use of such vehicles on public roads. While safety concerns are valid, the rush to eliminate them pre-maturely may lead to significant negative consequence for the poor, both the poor service provider and the user alike.

6. Lack of complementary investments and pro-poor policies or interventions in other sectors. Transport infrastructure’s contribution to a reduction in non-income dimensions of poverty will depend on the level of investments and the pro-poor nature of policies governing other services that are crucial for empowering the poor. This includes investing in sectors such as health, education, natural resource management, and agriculture. Only when sufficient investments are made in these sectors to provide these basic services for the poor, will transport infrastructure investment bring about significant poverty reduction.

7. Lack of awareness on the gender dimensions of transport. Empowering women is another dimension of poverty reduction that requires more attention. Women, particularly poor women, are often put at risk by the lack or poor quality of transport services (Cook, 2005). Despite improvements in transport modes, women are still likely to suffer from transport deprivation: this problem is most prevalent in gender segregated societies, where women are often unable to travel or trade unless there are sections and facilities in buses, trains, boats or waiting rooms that are for women only. While transport investments could provide improved connectivity benefits to women, if not well guarded, they can produce unintended detrimental impacts and give rise to a host of negative gender outcomes. Transport improvements have been implicated in the trafficking of girls and women, especially in localities near major highways and cross-border corridors (Lateef, 2005).

8. Road safety. The poverty implications of road safety have gained increasing attention in recent years. Investment in transport infrastructure in developing countries is generally not accompanied by investment in improved road safety standards. As a result, the increased volume of traffic often severely affects the security and safety of the population. Melhuish (2005) points out that road accidents alone can have significant socioeconomic impacts on poverty. Citing the results of a study in Bangladesh and India, he pointed out that that the poor suffered disproportionately from a road crash: they bore the biggest losses in income, and the unexpected medical or funeral costs accounted for a larger proportion of household income compared to non-poor households, forcing many to go deeper into debt. Overall, 7 out of 10 households suffered a decrease in total household income, and many households had to decrease food consumption as incomes declined. Even some households that were not poor before the crash found themselves poor afterwards.

9. Unintended negative externalities. There are negative externalities associated with improvements in transport infrastructure: increased mobility is linked to the spread of diseases such as HIV/AIDS; vehicle emissions along with dust generated by un-paved roads could cause health problems, alteration of water ways brought about by road construction could lead to detrimental consequences on natural resource systems, the emergence of motorized transport could displace labor, as in the case of porters who used to manually transport goods, and out-migration from rural communities could lead to other social problems. Such negative externalities are likely to exact a bigger toll on the poor rather than the non-poor.

Comment(s)

There are [2] comment(s) for this entry. Post a comment.

1. Anura Widana
   (posted 28 April 2010 / 07:19:56 PM)
   
   Excellent study, hats off to authors!
   Wish to add three more reasons why poor have not benefited from investments on infrastructure.
   a) In the planning process, the poor people were not identified and planning itself was undertaken poor exclusive
   b) The method/s adopted to rehabilitate/ build infrastructure have not been pro-poor. The implementation team decided to get construction work done through private contractors or politicized institutions both of which did not pay attention to poor in the area. Their main interest was to maximize profits for themselves from investments. Hence, poor lost the opportunity to work in construction and thereby could not benefit by way of wages.
   c) The design teams did not include poverty/social but technical specialists only. This made it difficult for implementers to identify poor people, to plan strategies to get them involved and to brain-storm on other projects/activities to be funded so that poor people benefit more from investments.
2. Mohammad Ziaul Ahsan
   (posted 23 April 2006 / 09:49:14 PM)
   
   Transport not only makes econmic development but also saves climate. This book has given us such path to make sustainable development for poverty eradication. Thanking you for your great participation.