Class #5 - infrastructure and development

Infrastructure and Development

Infrastructure and DevelopmentThe Small Industrial City:

Infrastructure wrapped up with social welfare; and essential to city planning.

Extreme Fordism:Tight link between social welfare

provisioning and industryHigh “spatial dependency” of

infrastructure provisionA particular model of social value

embodied in a highly solidaristic technical set-up

Tight links between urban project of social provisioning and national project of development


Relevance today:

The relationship between infrastructure and growth or economic prosperity

The “institutional bases” for infrastructure development (in particular the relative role of the private versus public sectors in financing infrastructure)

The different possible aims of infrastructure development


Gerschenkron: What are the different institutional forms of capital accumulation for modern industry?

Familiar problems of infrastructure development:

Characteristic features of modern industrial enterprise – complementarities & indivisibilities.

“Railroads cannot be built unless coal mines are opened up at the same time; building half a railroad will not do if an inland center is to be connected with a port city. Fruits of industrial progress in certain lines are received as external economies by other branches of industry whose progress in turn accords benefits to the former” (p. 10).


Gerschenkron:

Three ideal types of capital accumulation (and infrastructure development)

1. Britain (and the US) – capital accumulation outside the state (innovations such as railroad bonds on London exchanges)


Gerschenkron:


2. Germany and France – capital accumulation by industrial banks, encouraged and partly directed by the state (the Credit Mobilier – “a bank devoted to railroadization and industrialization of the country” – p. 13)


Gerschenkron:


3. Russia – capital accumulation by the state: “The great industrial upswing came when, from the middle of the eighties on, the railroad building of the state assumed unprecedented proportions and became the main lever of a rapid industrialization policy. Through multifarious devices such as preferential orders to domestic producers of railroad materials, high prices, subsidies, credits, and profit guarantees to new industrial enterprises, the government succeeded in maintaining a high and, in fact, increasing rate of growth until the end of the century” (pp. 19).


The Russian & Soviet Cases

1) Absolutist state-building and “communications” – 1700-1860s

2) Market-driven RR development – 1860s & 1870s

3) State RR drive – 1880s-WWI4) Electrification – 1920s &

1930s


The Russian & Soviet Cases:

“Communications” under Absolutism: 1700-1860s

Canals, roads & ports in the interest of establishing military control and creating a network of military industrial producers



Private Development : 1860s-1870s

Construction of railroads in particular to link new industrial centers (particularly of oil and textile production) to global markets



“The Big Push”: State-led Development, 1880s-WWI

Centralized planning and massive state investment; infrastructure as the “flywheel” of (private) economic development

Nearly 2/3rds of government budget spent on RR construction; (compare with India – average of 594 miles/year from 1860-1920)



Take off? 1900-1917 Gerschenkron: “The retrenchment of

government activities led not to stagnation but to a continuation of industrial growth. Russian industry had reached a stage whereit could throw away the crutches of government support and begin to walk independently.”

Disputes over the possibility of an “autonomous” industrial development once a certain level of capital accumulation had been reached.



The Soviet Electrification Drive (GOELRO)

Infrastructure not to service existing industry but as the central element in planning the total transformation of the country as a whole

GOELRO: Linked planned development of industry and population centers

GOELRO: Strong social welfare and ideological/ nation-building component


Notes on Post-WWII Develop-mentalism

• Soviet Union as the great model for post-WWII development

• Overwhelming orientation to infrastructure: in the early years nearly 100% of loans to transport and power sectors; 1960-1971 still over 50% to these sectors (Mason and Ascher 1973: 199)

• Financial versus economic assessment of projects (the rise of development planning)


Notes on Post-WWII Develop-mentalism

• “Any particular investment is inevitably embedded in a matrix of surrounding economic and other activities which it influences and by which it in tur is influenced…. “In extending the area of project evaluation to include interrelated activities the Bank moves in the direction of dealing with those costs and benefits to the economy that are external to individual investments but may be made internal to a group of investments considered together” (i.e. a development program).

Class #5 - infrastructure and development

Technology

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