Resource information
In many countries, place specific
investments in infrastructure are viewed as integral
components of territorial development policies. But are
these policies fighting market forces of concentration? Or
are they adding net value to the national economy by tapping
underexploited resources? This paper contributes to the
debate on the spatial allocation of infrastructure
investments by examining where these investments will
generate the highest economic returns "spatial
efficiency", and identifying whether there re tradeoffs
when infrastructure coverage is made more equitable across
regions "spatial equity". The empirical analysis
focuses on Uganda and is based on estimating models of firm
location choice, drawing on insights from the new economic
geography literature. The main findings show that
establishments in the manufacturing industry gain from being
in areas that offer a diverse mix of economic activities. In
addition, availability of power supply, transport links
connecting districts to markets, and the supply of skilled
workers attract manufacturing activities. Combining all
these factors gives a distinct advantage to existing
agglomerations along leading areas around Kampala and Jinja.
Infrastructure investments in these areas are likely to
produce the highest returns compared with investments
elsewhere. Public infrastructure investments in other
locations are likely to attract fewer private investors, and
will pose a spatial efficiencyequity tradeoff. To better
integrate lagging regions with the national economy, lessons
from the WDR2009 "Reshaping Economic Geography"
calling for investments in health and education in lagging
areas are likely to be more beneficial.
