Peter Henry discusses how poor countries lack infrastructure services: 1.2 billion people have no electricity and 1 billion live more than 2 kilometers from an all-weather road.
In a 2015 communique, the World Bank claimed that rich-country private capital could close the infrastructure services gap, achieve the sustainable development goals, and make money by moving from “billions to trillions” in infrastructure investment in poor countries. This lecture introduces an equilibrium framework. The framework compares a poor country’s social rate of return on infrastructure investment with: (a) the poor country’s return on private capital, and (b) the average rich country’s return on private capital. Applying the framework to the existing, comprehensive cross-country estimates of the social rate of return on infrastructure, reveals, contrary to the World Bank’s claim, that only 7 of 53 poor countries clear the dual-hurdle rate in both paved roads and electricity.
Meet our speaker and chair
Peter Henry is WR Berkley Professor of Economics and Finance and Dean Emeritus at NYU’s Stern School of Business, and Principal Investigator the Ph.D. Excellence Initiative, a post-baccalaureate program that addresses underrepresentation in economics by mentoring exceptional students of color interested in pursuing doctoral studies. He is the author of numerous peer-reviewed articles, as well as Turnaround: Third World Lessons for First World Growth.
Tim Besley is Professor of Economics and Political Science and Sir W. Arthur Lewis Professor of Development Economics at the London School of Economics and Political Science.
More about this event
The Department of Economics (@LSEEcon) at LSE, is one of the leading economics departments in the world. We are a large department, ensuring all mainstream areas of economics are strongly represented in research and teaching.
This event forms part of LSE’s Shaping the Post-COVID World initiative, a series of debates about the direction the world could and should be taking after the crisis.
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