Briefing: Infrastructure projects and the flexibility of urban infrastructure

Abstract

An economic evaluation of large infrastructure projects requires predictions to be developed about the evolution of the economic environment as well as of the effect of the project on economic dynamics. A set of new quantitative economic models can help with this task. A proper evaluation can not only make projects more profitable in terms of private and social returns, but also prevent whole regions from falling into decline. The author discusses the case of declining cities and the role that road and other forms of infrastructure have played in the persistence of their downfall. Particular emphasis is put on the distorted urban structure of the city of Detroit in the USA and the potential gains from policies that can improve its current structure. The author argues that a policy based on 'development guarantees' by the city government or other outside parties can help ameliorate the current negative impact of an infrastructure built for a city that used to have a population that was three times larger than today.