Financing infrastructure investment and socio-economic development

In: Nijkamp , P & Rienstra , S 1995 ' Financing infrastructure investment and socio-economic development ' Research Memorandum , no. 1995-24 , Faculty of Economics and Business Administration, Vrije Universiteit Amsterdam , Amsterdam .

Abstract

There is over the last few years a clear trend in Europe to privatise traditionalgovernmental tasks, also because of new EU legislation. Many of these taskshave traditionally been carried out by the government itself, largely because ofthe `natural monopoly' argument. Examples of current and future privatisationpolicies are the telecommunication and energy sector. For transport infrastructure(in this paper limited to roads and railways) however, the picture is lessunambiguous, as in the past decade the governments have even tended toincrease their influence, e.g., by formally taking over the financing of infrastructure.In this paper it is analyzed in how far the traditional arguments for governmentintervention are still valid. First, the strategic importance of transport infrastructureis investigated by analyzing the resulting economic impacts at several spatiallevels. Next, we investigate how this affects the financing and operation oftransport infrastructure as a traditional government task, by applying inter aliathe so-called Pentagon model and by employing the well-known Coase-theorem.In this context, the traditional arguments for government intervention and