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Economics of Infrastructure

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Course Type Course Code No. Of Credits
Discipline Elective SLS2EC237 4
  1. Does the course connect to, build on or overlap with any other courses offered in AUD?

This course builds on the core courses such as Microeconomics and Macroeconomics taught in the MA Economics programme (first year) and put emphasis on their application to the issues pertaining to the infrastructural sector. Further, it connects to the course on Development Economics offered to the MA Economics (final year) students. The scope of this proposed course is oriented towards the economic dimensions related to the development of infrastructure, given the elective course on “Capital, Value and Infrastructure” being offered for MA Sociology (also open to other MA programmes). It is noteworthy that the several modules constituting the course on “Capital, Value and Infrastructure” put emphasis on the political economy aspects of infrastructural development. In contrast, this course builds on the foundations provided to the MA economics students from their first year core courses and keeps the economic perspective as the central theme for all the constituting modules.

  1. Specific requirements on the part of students who can be admitted to this course:

(Pre requisites; prior knowledge level; any others – please specify)

Microeconomics (Core Course)

  1. No. of students to be admitted (with justification if lower than usual cohort size is proposed): 40
  2. Course scheduling: (summer/winter course; semester-long course; half-semester course; workshop mode; seminar mode; any other – please specify)

Winter Semester

  1. Proposed date of launch: January 2020
  2. How does the course link with the vision of AUD and the specific programme(s) where it is being offered?

Given the discourse of economic growth and development, the proposed course aims to bring into focus the infrastructural issues and economic dimensions related to them. As an elective course, this would provide an opportunity to students enrolled for the Masters programme at the AUD to acquaint themselves with the crucial dimensions related to the infrastructural sector and develop an analytical perspective in this regard. Specifically, in the case of the MA Economics programme, the proposed course aims to impart training to the students on physical/economic infrastructure such as energy/power, transport, telecommunications, transport, logistics, storage, water supply and sanitation. It would be instrumental in bridging the gap which exists in terms of training of the students who do have electives in social infrastructure such as health and education, but do not have such options related to the physical/economic infrastructure.

  1. Course Details:
    1. Summary

This course aims to focus on the physical/economic infrastructure and contributes to the understanding of the students regarding its relevance, importance and linkages to the process of economic growth and development in general. It aims to provide training to students for economic analysis of infrastructural issues while contextualizing the issues in the broader domain of economic growth and development. It put thrust on providing comprehensive introduction to the conceptualization of infrastructure from an economist’s point of view and thus offers in depth orientation on how economic thinking in this regard has evolved over time.

The course will deal with the issue from both macro- and micro-economic perspectives. On the macroeconomic side, the course introduces (i) the conceptualisation of infrastructure and its relation to the development agenda and objectives and (ii) the development of infrastructural statistics and the consideration of infrastructure as an important variable in economic growth models. On the microeconomic side, the course delves deeper into infrastructural sub-sectoral dimensions and analyses key issues pertaining to the demand, supply, pricing, efficiency of market mechanism, role of public intervention etc.

Objectives

    1. To equip students with foundational knowledge of economic principles that serve as the basis of conceputalisation, defining characteristics, classification and statistical indicators of infrastructure in an economy.
    2. To acquaint students with the mainstreaming of infrastructural development in the economic growth and development literature from macro-economic perspective. 
    3. To develop understanding towards the range of issues at the economic infrastructure sub-sectoral level from the micro-economic perspective. 

Overall structure

This course is structured over seven modules (including a separate module for sub-sectoral economic infrastructure). Each module is reading intensive and focusses both on the theoretical as well as empirical aspects of the issues involved. It is emphasised that the two modules – 1 and 2 are compulsory whereas of the remaining five modules (3 to 7) at least three would be covered in a semester-long course.

​​​​​​​Contents (brief note on each module; indicative reading list with core and supplementary readings)

Module 1: Introduction

This module introduces students to the conceptual foundations of infrastructure as an economic concept. It develops their understanding of economic principles and their use in relation to the various dimensions of infrastructure such as definition, characteristics, types or classification, and related statistical indicators.  

  1. CSO. (2012) Manual on Infrastructure Statistics, Central Statistical Organisation, Government of India.
  2. Frischmann, B. M. (2012). Infrastructure: The social value of shared resources. Oxford University Press.
  3. GOI (undated) Definition of infrastructure, Secretariat for Infrastructure, Planning Commission, Government of India.
  4. Ingram, G. K., & Fayx, M. (2008). 21 Physical infrastructure. International handbook of development economics, 1, 301.
  5. Sharkey, W. W. (2009). The theory of natural monopoly. Cambridge University Press.

Module 2: Role and Importance of Infrastructure

This module discusses the mainstreaming of infrastructure in the economic growth and development discourse. The central focus here would be to discuss how economic thinking about the relation of infrastructure to the process of economic growth and development has evolved over time. This would thus emphasise the significance and the contribution of infrastructural services to economic development outcomes.

  1. ADB. (2017). Meeting Asia’s Infrastructure Needs, Asian Development Bank.
  2. Aschauer, D. A. (1989). Is public expenditure productive? Journal of monetary economics, 23(2), 177-200
  3. Aschauer, D. A. (1990). Why Is Infrastructure important? Industry Week
  4. Dissou, Y., & Didic, S. (2013). Infrastructure and growth. In Infrastructure and Economic Growth in Asia (pp. 5-45). Springer, Cham.
  5. Estache, A., & Garsous, G. (2012). The impact of infrastructure on growth in developing countries. IFC Economics Notes. Note 1. Washington, DC: International Finance Corporation.
  6. Frischmann, B. M. (2012). Infrastructure: The social value of shared resources. Oxford University Press.
  7. Ghosh, B., & De, P. (2005). Investigating the linkage between infrastructure and regional development in India: era of planning to globalisation. Journal of Asian Economics, 15(6), 1023-1050
  8. Kessides, C., & Ingram, G. K. (1995). Infrastructure's Impact on Development: Lessons from WDR 1994. Journal of infrastructure systems, 1(1), 16-32

Module 3: Energy and Power

This module focusses on the energy infrastructural issues. It develops the understanding regarding the relation between energy demand and economic growth and brings into focus the issues such as energy poverty and access to modern energy services in the context of developing economies. In addition, it explores the aspects related to energy markets, energy pricing, role of technology and energy infrastructure (on account of the interaction between the energy system on the one hand and the environment on the other).  

  1. Bhattacharyya, S. C. (2011). Energy economics: concepts, issues, markets and governance. Springer Science & Business Media.
  2. Bonan, J., Pareglio, S., & Tavoni, M. (2017). Access to modern energy: a review of barriers, drivers and impacts. Environment and Development Economics, 22(5), 491-516.
  3. Chan, N. W., & Gillingham, K. (2015). The microeconomic theory of the rebound effect and its welfare implications. Journal of the Association of Environmental and Resource Economists, 2(1), 133-159.
  4. Goldthau, A. (2014). Rethinking the governance of energy infrastructure: Scale, decentralization and polycentrism. Energy Research & Social Science, 1, 134-140.
  5. Lechthaler, F. (2017). Economic growth and energy use during different stages of development: an empirical analysis. Environment and Development Economics, 22(1), 26-50.
  6. vanBenthem, A. A. (2015). Energy leapfrogging. Journal of the Association of Environmental and Resource Economists, 2(1), 93-132.

Module 4: Transport, Logistics and Storage

This module brings into focus the role of transportation infrastructure in the economic activity. It draws attention to the classification of transport system into dedicated and non-dedicated modes of transport. It develops the understanding of students about the modal mix (such as road, railways, air and water transport) and modal-specific issues such as role of clean fuel and vehicle technologies. It further highlights the importance of logistics infrastructure and costs as being crucial determinant of the economic competitiveness for a nation. In addition, it put thrust on the storage infrastructure (refrigerated and non-refrigerated) and underscores the need for integrated cold chain. 

  1. NCCD. 2015.  All India Cold-chain Infrastructure Capacity (Assessment of Status & Gap), Delhi.
  2. Nilakant, V., & Ramnarayan, S. (2009). Changing tracks: reinventing the spirit of Indian railways. HarperCollins Publ.
  3. NTDPC. (2014). India Transport Report: Moving India to 2032, Vol. I to III, National Transport Development Policy Committee.
  4. Ramachandran, M. (2011). Metro rail projects in India: a study in project planning. Oxford University Press.
  5. Rantasila, K., & Ojala, L. (2012). Measurement of national-level logistics costs and performance. International Transport Forum Discussion Paper
  6. Singhal, R., & Saksena, S. (2017).  Performance Assessment of the Storage and Warehousing Industry in India. The Journal of Industrial Statistics, 6(1), 15-40.

Module 5: Telecommunications

The role of information and communications technology is gaining momentum and they are increasingly being considered as influencing the productivity both at the micro- and macro level. Hence, this module aims to expose students to the cutting edge research in this area while training them in the application of economic principles to address challenges in terms of valuation of spectrum, pricing and institutional/regulatory aspects.

  1. Erumban, A. A., & Das, D. K. (2016). Information and communication technology and economic growth in India. Telecommunications Policy, 40(5), 412-431
  2. Ghosh, S., & Prasad, R. (2012). Telephone penetrations and economic growth: evidence from India. NETNOMICS: Economic Research and Electronic Networking, 13(1), 25-43
  3. Mitra, A., Sharma, C., & Véganzonès-Varoudakis, M. A. (2016). Infrastructure, information & communication technology and firms’ productive performance of the Indian manufacturing. Journal of Policy Modeling, 38(2), 353-371.
  4. Prasad, R. (2010). Value of 2G Spectrum in India. Economic and Political Weekly, 25-28
  5. Prasad, R., & Sridhar, V. (2007). Spectrum Allocation Mechanism for 3G Mobile Services. Economic and Political Weekly, 2150-2152.
  6. Prasad, R., & Sridhar, V. (2008). A critique of spectrum management in India. Economic and Political Weekly, 13-17
  7. Prasad, R., Sridhar, V., & Bunel, A. (2016). An Institutional Analysis of Spectrum Management in India. Journal of Information Policy, 6, 252-293.
  8. Prasad, R., & Sridhar, V. (2014). The Dynamics of Spectrum Management: Legacy, Technology and Economics. Oxford University Press.

Module 6: Water and Sanitation

Access to safe drinking water supply and sanitation services remain instrumental for improving the quality of life in general and public health in particular. This module thus aims to emphasise the need for safe, affordable, acceptable, available and accessible drinking water and sanitation services for all. It would expose students to the challenges especially in the context of low- and middle-income countries and highlighting the infrastructural gaps in the rural and urban areas. In addition, it acquaints them regarding the concerns on account of rapid urbanization, need for gender perspective and governance issues in this regard. 

  1. Araral, E., & Ratra, S. (2016). Water governance in India and China: comparison of water law, policy and administration. Water Policy, 18(S1), 14-31
  2. Hutton, G. & Chase, C. (2017). Water Supply, Sanitation and Hygiene in Mock, Charles N., Nugent, R. Kobusingye, O., and Smith, Kirk R. (ed.) Injury Prevention and Environmental Health, The World Bank.
  3. Khanna, T., & Das, M. (2016). Why gender matters in the solution towards safe sanitation? Reflections from rural India. Global public health, 11(10), 1185-1201.
  4. Starkl, M., Brunner, N., & Stenstrom, T. A. (2013). Why do water and sanitation systems for the poor still fail? Policy analysis in economically advanced developing countries. Environmental science & technology, 47(12), 6102-6110.
  5. Tortajada, C. (2016). Policy dimensions of development and financing of water infrastructure: The cases of China and India. Environmental Science & Policy, 64, 177-187.
  6. Wankhade, K. (2015). Urban sanitation in India: Key shifts in the national policy frame. Environment and Urbanization, 27(2), 555-572.

Module 7: Contemporary Challenges in Infrastructure Development

This module introduces students to the perspectives regarding the role of public and private sector and familiarise them with issues pertaining to public-private participation (PPP) in financing the infrastructure development in an economy. In view of the economy-environment interactions, it further contextualizes the need and challenges for the transformation of the existing infrastructure on the one hand and the future infrastructural development on the other. In addition, it put emphasis on the importance of global infrastructural networks in a globalizing world.

  1. Fuss, S., Chen, C., Jakob, M., Marxen, A., Rao, N. D., & Edenhofer, O. (2016). Could resource rents finance universal access to infrastructure? A first exploration of needs and rents. Environment and Development Economics, 21(6), 691-712
  2. Lennon, M. (2015). Green infrastructure and planning policy: a critical assessment. Local Environment, 20(8), 957-980
  3. Mohanty, B., Bhanumurthy, N. R., & Dastidar, A. G. (2017). What explains Regional Imbalances in Infrastructure?: Evidence from Indian States (No. 17/197)
  4. Wright, H. (2011). Understanding green infrastructure: the development of a contested concept in England. Local Environment, 16(10), 1003-1019.

Assessment Details with weights:

  1. Class Presentation (10%)
  2. One Assignment (20%)
  3. Term Paper (35%)
  4. End-Semester Exam (35%)

Reference Journals:

  1. Journal of Infrastructural Development
  2. Journal of Infrastructure Systems
  3. Telecommunications Policy
  4. Economic and Political Weekly
  5. Water Policy
  6. Energy Economics
  7. Energy Policy
  8. Environment and Development Economics
  9. Journal of the Association of Environment and Resource Economists
  10. Economics of Transportation

Pedagogy:

  1. Instructional design

This is a four credit course, therefore having weekly lectures of four hours. Class interaction is encouraged in these lectures. ​​​​​​​

Special needs (facilities, requirements in terms of software, studio, lab, clinic, library, classroom/others instructional space; any other – please specify)

Class rooms as required

    1. Expertise in AUD faculty or outside

AUD Faculty members with expertise in infrastructural issues would be engaged in taking few lectures. Outside faculty members with experience of research in infrastructural issues would be sought for special lectures.

    1. Linkages with external agencies (e.g., with field-based organizations, hospital, labour research institutes and others)​​​​​​​
  2. Assessment structure (modes and frequency of assessments)

The assessment structure would include four assessments, none of which will have more than 40% weightage. Assessments would include class presentation, assignment, term paper and end-semester exam

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