Roads and Transport

Transport infrastructure can improve welfare, but it also creates challenges for countries participating in the projects. For any country, building a railway or a road has some value, but it also has value to the African countries around it, because improvements in one part of the transport network reduce shipping times for all countries in the network. If each country individually decided how to invest in infrastructure, there spill overs would not be taken into account. This is even truer when transport infrastructure crosses one or more borders, pointing to the value of international cooperation in this area. But common transport infrastructure also creates challenges. It has large implications for public finances, and may have asymmetric effects on the trade and GDP of individual countries. This raises the possibility that the countries that build – and bear the cost of – large sections of the project may not be the ones that will gain the most from it.