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Growth and Non-Traded Sectors: The Scope of India’s Infrastructure

An NRE’s Take on …. Growth and Non-Traded Sectors: The Scope of India’s Infrastructure. Non-Traded Sectors. Markets, in principle, clear locally. Do not involve competition among international providers.

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Growth and Non-Traded Sectors: The Scope of India’s Infrastructure

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  1. An NRE’s Take on … Growth and Non-Traded Sectors: The Scope of India’s Infrastructure

  2. Non-Traded Sectors • Markets, in principle, clear locally. • Do not involve competition among international providers. • Characteristics of Non-traded services such as infrastructure (telecommunications, electricity, water and sewerage, natural gas, and transportation): a) extensive economies of scale and scope that generally lead to market concentration and inhibit competition; b) large sunk costs relative to fixed and variable costs; c) services deemed essential to a broad range of users, making their provision and pricing politically sensitive. • Natural target for government intervention.

  3. Infrastructure “ Our growth potential will be realized only if we can ensure that our infrastructure does not become a severe handicap.”

  4. Is there a Link? • The evidence is mixed. • Two-way causality.

  5. Telecommunication

  6. The Link

  7. … Looking BackMilestones in Infrastructure Reform in the United States

  8. … Looking BackPrivate Investment in Infrastructure in Developing and Transition Economies, by Sector(1990–2001)

  9. … Looking BackLatin America and the Caribbean Has Led Developing Regionsin Private Investment in Infrastructure, 1990–2001

  10. Looking Forward … Challenges ahead: • Sustained expansion of investment in and improved performance of her infrastructure sectors. • Institutional capabilities and organizational reforms that lend credibility and effectiveness to government policy. • Reforms directed toward drawing resources into expanding, modernizing, and improving infrastructure facilities and services: • Fair competition should be promoted by lowering entry barriers and giving entrants access to network infrastructure. • Innovations must be facilitated by focusing on goals to be achieved and giving operators and investors the leeway to introduce more efficient technologies and innovative service arrangements. • Absent adequate complementary investments, infrastructure alone is not likely to build the “road” for moving jobs to people in a world where people increasingly keep moving to jobs. • Need to design and effectively implement adequate governance mechanisms to compensate those adversely affected by the transformation of infrastructural services.

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