Investing in infrastructure: best practice from Bilbao to New South Wales

By on 08/03/2022 | Updated on 09/03/2022
The Guggenheim Museum formed part of Bilbao's regeneration. Photo: ELG21-Pixabay

Governments around the globe have focused on infrastructure investment as part of efforts to bounce back from the coronavirus pandemic and address climate change. How can government maximise the benefits from such projects? Experts take a look at six projects from around the world and share five key lessons

Governments have turned to infrastructure development to stimulate economic growth. From the UK’s Plan for Growth and the European Green Deal to the US’s Build Back Better Plan, infrastructure has been positioned as the panacea for better connecting people and places with opportunities.

A new report investigates experiences of investing in infrastructure in six areas across the world. Produced by City-Region Economic Development Institute (City-REDI) and the Chartered Institute of Public Finance and Accountancy (CIPFA) as part of an ‘Addressing Regional Inequalities’ series, the research investigates the policy settings and factors that support successful outcomes from infrastructure programmes and projects. In particular, it examines the governance and financing frameworks behind the infrastructure initiatives to provide insights into how alternative systems and approaches can deliver key outcomes that help address regional inequalities.

Read more: Levelling up lessons: how to make regional development work

A key finding of the report is that investment in major infrastructure programmes and projects can play an important role in stimulating regional economic growth and increasing quality of life. All of the infrastructure initiatives profiled have achieved significant impacts on their respective regions. However, some of the projects did not meet all their aims or proceeded at a slower pace than initially planned.

The report features case studies of:

  • The city-wide regeneration and creative rebranding of Bilbao, Spain
  • The Restart NSW Infrastructure Programme, New South Wales, Australia, focused on funding high-priority infrastructure projects that promote economic growth and productivity
  • The construction of the Øresund Bridge linking the Øresund region between Sweden and Denmark
  • Wireless Verrua, a community-led experimental broadband network in Verrua Savoia, in Northern Italy
  • The Smart Cities Mission, a fund aimed at tackling issues related to urbanisation and the promotion of smart infrastructure solutions in key cities across India
  • The RAIN projects designed to promote broadband networks in rural Lithuania

Based on desk research into the six case studies as well as in-depth interviews with policymakers, academics, and practitioners in New South Wales and the Øresund region, the research examines the strengths of the approaches adopted and the challenges encountered. Through this, we identified five key reasons for success in designing and delivering infrastructure initiatives aimed at addressing regional inequalities:

  1. Varied and alternative financing mechanisms for investments in infrastructure have worked in the case studies examined. The case studies illustrate the importance of investigating the different options available and tailoring them to the governance structures, fiscal powers, and long-term aims of the area.
  2. Competitive bidding processes need to be well thought through to provide sufficient capability for all to participate and robust appraisal. The Restart NSW and Smart Cities Mission India initiatives involve competitive style funding mechanisms. They showcase learning points through the use of tiered monitoring and evaluation frameworks and the establishment of independent agencies to analyse project proposals.
  3. Embedding robust evaluation, monitoring, and appraisal mechanisms that are implemented, adjusted, and updated throughout the project life cycle is vitally important. Evaluation tended to be weak across the case studies, with limited mechanisms in place to evaluate the progress and impact of initiatives. Limited sharing of statistics and appraisal findings across organisations hampers best practice.
  4. Partnership working is important for uniting stakeholders around key initiatives and addressing gaps in capacity. The Øresund region case study shows how informal fora are being used in Greater Copenhagen to strengthen relationships between policymakers and industry stakeholders. The Bilbao case study illustrates how bodies that unite public and private organisations around a common vision can play a key role in ensuring infrastructure projects are successfully delivered. The Restart NSW programme points to how central government can play a key role in supporting local authorities to develop business cases and project proposals.
  5. Fiscal autonomy can support the development of initiatives. Many of the infrastructure initiatives profiled have been introduced by city-regions with high levels of fiscal autonomy, but the importance of fiscal autonomy is particularly striking within the Bilbao case study. Nonetheless, for national infrastructure initiatives the extent of fiscal autonomy available is likely to be less relevant.

Read more: Investing energy: what’s needed to fund the transition to a green economy?

Political systems and priorities differ across countries meaning it is likely to be difficult to directly ‘transplant’ experiences from the case study areas to other countries, such as the UK. However, the case studies point to key lessons for infrastructure investment in the importance of developing strong cultures of monitoring, evaluation, and appraisal, as well as ensuring context-relevant financing mechanisms and appropriate capacities across local, regional, and central government/s. The interviews conducted also suggest that public finance professionals have a key role to play in working alongside partners (central and local government, industry, and citizens) to develop visions, operationalise strategies, and then drive the monitoring and evaluation of initiatives. To do this, it is vital that public finance professionals build strategic and operational relationships at local, regional, pan-regional, and national scales.

About Abigail Taylor, Anne Green, and Gina Coe

Dr Abigail Taylor is a research fellow, Professor Anne Green is professor of regional economic development, both at the City-Region Economic Development Institute at the University of Birmingham. Gina Coe was a City-REDI summer intern and current government social researcher.

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