Institutions and the Thirst for ‘Prestige’ Transport Infrastructure

Abstract

Transport infrastructure investment has been the cornerstone of many development strategies. However, the returns of transport infrastructure investments have frequently been below expectations. In this chapter we argue that the weak economic returns of new infrastructure investments are partially the result of poor government quality. Decision-makers in areas with strong institutional deficiencies have had a tendency to resort to large and highly visible ‘prestige’ infrastructure projects, based of political interests over sound socioeconomic evaluations, to the detriment of more humble interventions aimed at addressing transport bottlenecks. As illustrated by a number of examples from some of the less developed regions of Europe, the consequence of this trend has been a proliferation of ‘white elephants’ of dubious economic and social value. Regions with a better government quality, by contrast, have invested more in less ‘glitzy’, but more necessary infrastructure projects with better economic results.