The Role of Investment and Regulatory Reforms in the Development of Infrastructure across Transition Economies

The main aim of this paper is to assess whether investment in infrastructure and broader institutional infrastructure reforms have been reflected in better infrastructure performance indicators across transition economies. Our econometric analysis shows that at the enterprise level the reduction of utility arrears is significantly associated to lower costs in terms of interruption of power and telecom service provision. This suggests that the discipline exercised by private sector involvement is starting to have some impact. At the country level our regression results show that increased investment, tariff increases and the establishment of an independent regulator are all significantly associated to the reduction of power and telecom outages. * Principal Economist, Office of the Chief Economist, European Bank for Reconstruction and Development, One Exchange Square, EC2A 2JN, Tel: +44 20 73387213; Fax: +44 20 73386110 Email: [email protected] Keyword: Infrastructure, Investment, Regulation 347 2