It is widely accepted that investments in infrastructure can lead to direct and indirect jobs, and usually have spillover effects into other economic opportunities. For example, good transport systems and agro-logistics services help move freight from farms to locations where value can be added (like intermediate processing, packaging and sorting of agricultural produce) and ultimately to consumers. However, the anticipated benefits of these investments are not always fully realized, or sometimes they happen much later. How can investments in infrastructure have a multiplier effect in stimulating the economy and, eventually, facilitate job creation?
To maximize their impact, infrastructure projects should explicitly analyze and include complementary investments (e.g., industrial parks or processing facilities) and soft interventions (financial services, ICT, laws and regulations, etc.) needed to unlock the potential of new markets. As part of a broader effort to link investment in rural roads to economic opportunities, the Roads to Jobs study analyzed strategic value chains in the agriculture sector in Rajasthan, India, to better understand the challenges faced by farmers in accessing markets and provided recommendations to address constraints.
Bangladesh is now the world’s second largest apparel exporter after China. Its garment industry accounts for 80% of its overall exports and around 4 million jobs. Atiur Rahman, Governor of the Central Bank of Bangladesh, tells us that the government sees employment (both formal and informal) as the link between growth and poverty reduction, with an emphasis on inclusive growth policy and financial inclusion.
As policymakers in developing countries weigh policies to spur growth and reduce poverty, a big question is whether investing public capital in infrastructure should be a high priority? In a new book, "Public Capital, Growth and Welfare: Analytical Foundations for Public Policy," Pierre-Richard Agénor (Hallsworth Professor of International Macroeconomics and Development Economics, University of Manchester) argues that the answer is yes.