Estache, AntonioIimi, Atsushi2012-06-012012-06-012008-07https://hdl.handle.net/10986/6854Infrastructure is the engine for economic growth. The international donor community has spent about 70-100 billion U.S. dollars on infrastructure development in developing countries every year. However, it is arguable whether these financial resources are used efficiently, particularly whether the current infrastructure procurement prices are appropriate. Without doubt a key is competition to curb public procurement costs. This paper analyzes procurement data from multi and bilateral official development projects in three infrastructure sectors: roads, electricity, and water and sanitation. The findings show that the competition effect is underutilized. To take full advantage of competition, at least seven bidders are needed in the road and water sectors, while three may be enough in the power sector. The paper also shows that not only competition, but also auction design, especially lot division, is crucial for reducing unit costs of infrastructure. Based on the estimated efficient unit costs, the annual financial needs are estimated at approximately 360 billion U.S. dollars. By promoting competition, the developing world might be able to save at most 8.2 percent of total infrastructure development costs.CC BY 3.0 IGOAFFILIATED ORGANIZATIONSASYMMETRIC INFORMATIONAUCTIONAUCTION DESIGNAUCTION MARKETSAUCTIONSBENEFICIARIESBIDBID PRICEBIDDERSBIDDINGBIDSBOND UNDERWRITERSBUSINESS DEVELOPMENTBUSINESS ENVIRONMENTBUSINESS OPPORTUNITIESCOMMODITYCOMPETITIVE BIDDINGCOMPETITIVENESSCONCESSIONCONTRACT DESIGNDATA COVERAGEDEBTDEBT RELIEFDEBT REPAYMENTSDEVELOPING COUNTRIESDIGITAL ASSISTANTSDISBURSEMENTDUMMY VARIABLEDUMMY VARIABLESEAST EUROPEECONOMIC DEVELOPMENTECONOMIC EFFICIENCYECONOMIC GROWTHECONOMIC INFRASTRUCTUREECONOMIES OF SCALEELASTICITYELECTRICITYELECTRICITY GENERATIONELECTRICITY GENERATORSELECTRICITY INFRASTRUCTUREELECTRICITY SECTORENTERPRISE SURVEYENTERPRISE SURVEYSEQUIPMENTEXTERNAL BORROWINGSEXTERNAL DEBTEXTERNALITIESFINANCIAL RESOURCESFOREIGN COMPANIESFOREIGN FIRMSGENERATIONGENERATORSGOVERNMENT CONTRACTGOVERNMENT CONTRACTSGOVERNMENT EXPENDITUREHEALTH EDUCATIONHIGHWAYHIGHWAY CONSTRUCTIONHOLDINGHOST COUNTRYHUMAN CAPITALIMPLEMENTATION PLANINFORMAL PAYMENTINFRASTRUCTURE CAPACITYINFRASTRUCTURE CONTRACTINFRASTRUCTURE COSTINFRASTRUCTURE DEVELOPMENTINFRASTRUCTURE DEVELOPMENT PROJECTSINFRASTRUCTURE INVESTMENTINFRASTRUCTURE PROJECTSINFRASTRUCTURE SECTORINFRASTRUCTURE SERVICESINFRASTRUCTURE SPENDINGINFRASTRUCTURESINSTALLATIONINTERNATIONAL BANKINTERNATIONAL DEVELOPMENTINVESTINGINVESTMENT CLIMATEINVESTMENT COSTSINVESTMENT NEEDSLANESLENGTH OF ROADLENGTH OF ROADSLEVEL OF COMPETITIONLOCAL BUSINESSLOCAL MARKETSMANUFACTURINGMIDDLE EASTMUNICIPAL BONDNATURAL RESOURCESNETWORKSNORTH AFRICAPOLITICAL ECONOMYPOLITICAL STABILITYPOWERPOWER SECTORPRICE AUCTIONPRICE COMPETITIONPRIVATE FINANCINGPRIVATE INFORMATIONPRIVATE SECTORPRIVATE SECTOR DEVELOPMENTPROCUREMENTPROCUREMENT PROCESSPROCUREMENTSPUBLIC ADMINISTRATIONPUBLIC INFRASTRUCTUREPUBLIC INVESTMENTPUBLIC INVESTMENTSPUBLIC PROCUREMENTPUBLIC ROADPUBLIC SERVICESPUBLIC WORKSRELIABILITYRESERVERESULTRESULTSROADROAD COSTSROAD PROJECTSROAD SECTORROADSSANITATIONSANITATION SECTORSERVICE CONTRACTSSOCIAL SERVICESSTANDARD CONTRACTSTOCKSSUB-SAHARAN AFRICATELECOMTELECOMMUNICATIONSTENDERINGTRANSACTIONTRANSACTION COSTSTRANSMISSIONTRANSMISSION LINESTRANSPARENCYTRANSPORTTRUETUNNELUSESWATER CONSUMPTIONWATER DISTRIBUTIONWATER INFRASTRUCTUREWATER SERVICEWATER SUPPLY INFRASTRUCTUREWATER SUPPLY SECTORWEBWorld Bank10.1596/1813-9450-4662