Infrastructure access and household welfare in rural ghana: the empirics of the nexus

Access to public infrastructure services is generally identified in the development literature as critical for economic transformation. At the household level, infrastructure access can be essential for improved socio-economic well-being. However, empirical evidence on the extent to which access to different infrastructure services contribute to enhancing household welfare, especially in the developing world, remains limited. In a comprehensive review of the literature on this subject, Ayogu (2007) aptly surmise that overall … the question is not about whether infrastructure matters but precisely how much it matters in different contexts? The present thesis responds to this knowledge gap by providing some quantitative understanding of how much infrastructure matters to economic development and in the context of Ghana’s development experience since the 1990s. This is achieved by investigating, empirically, the direction and size of the relationship between access to three different public infrastructure services and household welfare. In so doing, the study presents a new construction of the Sustainable Livelihood Framework. This is based on the concept of relative cumulative effect of institutions in the determination of livelihood outcomes and the elaboration of livelihood assets by private and public types. This framework is tested under the premise that infrastructure services are publicly provided. Access to these public resources is therefore exogenous to household decisions though they complement household capital endowments in ways that eventually influence welfare outcomes. Welfare is thus modeled dynamically as a function of: 1) private capital endowment; 2) a vector of public assets that transpire through the manifestation of the prevailing institutions; 3) household’s characteristics; and, 4) household’s livelihood vulnerabilities. Based on pseudopanel modeling and using three waves of nation-wide livelihood surveys, the empirical findings suggests that across Ghana’s rural economy, access to public transport, electricity and water infrastructure have important but differential impact on household welfare, ceteris paribus. Whereas the impact of access to public transport system and electricity is found to be significant and consistently positive, that of water depends on the household’s endowment in private assets and the opportunity costs it faces. Focusing on agricultural households, access to public transport shows significant and positive impact on welfare, irrespective of asset endowment. Development policy in Ghana should therefore prioritize public investment in functional rural transport systems. To maximize the welfare impact, provision of electricity and water is recommended to be targeted at rural communities with sufficient transport networks and private capital endowments.