Place infrastructure investment at the heart of economic policy

Infrastructure agonises from a sequence of market let-downs that hinder the optimum level of investment from being stretched. What usually sets venture in infrastructure apart from other types of venture is its long-term, wealth concentrated nature - it typically produces long-lived possessions with high dashed costs. Difficulties of trustworthy commitment lie at the heart of the suitable governing strategy of infrastructure policy. 

The need for such a long-term agreement is made more pressing by the possibility of technological change leading to obsolescence, which rises fear among possible private stakeholders that an adequate return will not be made on funds. This can be achieved only if investors have a control or if governments, through regulators, pledge that future customers will pay a price that replicates typical outlays. 

Government involvement is also frequently essential to allow for both positive and negative externalities related with infrastructure projects – e.g. environmental considerations are an increasingly important factor in infrastructure venture conclusions. 

  

 

 

 

 

 

 

 

 

 

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