Poverty reduction requires economic growth which, when accompanied by good governance and sound macroeconomic management, results in socially inclusive and sustainable development. Public investment in physical infrastructure is essential to raise productivity and achieve long-term growth. Such investment is especially critical in rural areas as they are home to a majority of the poor in developing countries. This can lead to higher farm and non-farm productivity, employment, income opportunities and increased availability of wage goods, thereby reducing poverty by raising mean income and consumption and contributing to overall economic growth. Econometric results highlight the importance of country specificities in terms of causes of poverty and effectiveness of alternative infrastructure investments.
