The impact of public infrastructure on municipal economic development: Empirical results from Kenya

This paper considers the role of public infrastructure in municipal economic development in Kenya. The primary objectives of the examination are to estimate the impact of roads and water infrastructure on municipal incomes, to ascertain the extent to which differences in institutional authority over water service delivery affect the quantity or quality of infrastructure, and to determine whether the presumed simultaneity between infrastructure and incomes matters for purposes of estimating the effect of the former on the latter. The analysis provides evidence to suggest that the impact of public infrastructure in the roads and water sectors on municipal economic development is significant. Also, the examination implies that local governments, when given authority over water services, do not appear to provide a larger quantity of water infrastructure than does the central government and/or its parastatal. On the other hand, and perhaps more significantly, the paper provides some initial evidence that the public water infrastructure services provided by local authorities are more accessible and reliable than those provided by central institutions. Finally, the results of the paper support the conclusion that possible simultaneity between public infrastructure and incomes does not seem to matter for estimating the quantitative impact of infrastructure on economic development.