N 92-64-02398-4 © OECD 2006 KEY FACTORS DRIVING THE FUTURE DEMAND FOR SURFACE TRANSPORT INFRASTRUCTURE Table 4.2. (Fay-Yepes) Road infrastructure estimates to 2010 Total Total Growth- Annual Annual infrastructure infrastructure infrastructure investment- % growth stock 2000 stock 2010 2000-10 infrastructure Regions of the world 1. High-income/industrialised 3 951 4 587 2. Medium-income 1 450 3. Low-income/developing 1 001 4. Developing (low/medium income) 2 593 East Asia and Pacific Europe and Central Asia Latin America and Caribbean Middle East and North Africa South Asia Sub-Sahara Africa World 6 129 7 180 1 051 259.4 The result that developing countries will need to invest in roads at an accelerated rate is consistent with empirical evidence that finds general underinvestment in road infrastructure among less-developed regions. Over the period 1950-92 (using panel data), there were strong relationships running bi-directionally between infrastructure (including paved roads) and GDP per capita - implying long-run causality in both directions. The effect was not homogeneous across all countries: the productivity-enhancing benefits of additional infrastructure spending is determined by whether the infrastructure stock is in "wealth-maximising" equilibrium (i.e. is optimal). Where infrastructure stocks are below optimal, additional spending on infrastructure is productivity- enhancing, whereas additional spending on infrastructure is destructive of wealth when infrastructure stocks are above optimal (i.e. overbuilt). ¹ 16 While the net (global) impact of additional infrastructure spending was about zero (i.e. infrastructure stock about optimal), there are clear signs of underinvestment in infrastructure in most developing countries, especially for paved roads. Key drivers for road capital stock and new construction By far the biggest driver for future road transport use and infrastructure comes from growth in GDP and population - and rising GDP per capita. This is modelled directly in terms of the impact of GDP gro