Quick Lesson: Arguements Against Private Funding of Infrastructure

The argument against World Bank and IMF funding of infrastructure projects is the same argument Western governments face when building their own domestic infrastructure: private development is cheaper and quicker than government agencies. Although, as shown by Rietveld and Bruisman, infrastructure tends picked up by the private sector after the government has started it, especially in profitable ventures such as canals and rail. The problem with the reliance on private funding for infrastructure is that building roads and bridges to create linkages is expensive and the ability to create links that are useful and feasible is usually left to the discretion of the planning and transportation agencies of governments. In theory, however, private firms would seek to minimize the “costs of building or operating profitable infrastructure…whilst the return is maximized” (Graham 2000:192). The problem with such “profitable” infrastructure is that it usually includes passenger rail, toll bridges/roads and is concentrated in more urban and economically developed areas that can pay for the use of the services.

Although the idea of a more capitalist approach to infrastructure seems to be plausible in nations such as the United States which already have a solid system of roads and highways which are available free of charge for public use, and with some toll bridges/roads and passenger rail to provide more choice to citizens, the concept of relying fully on private funding of roads would not lead to wise planning decisions based on accessibility by the population but instead would fixate around capital flow and the most economically profitable venture. While infrastructure that provides revenue for government and companies is not necessarily a negative, the main issue with reliance is the lack of external considerations and good planning practices.