Box III.3. Main features of transport infrastructure
Transport infrastructure comprises a heterogeneous group of industries, including roads, railways, airports and
seaports. An integrated transport infrastructure that includes all these modes makes it possible to link underdeveloped
parts of a country and regions into the global economy. For manufacturing and trading activities, the quality and
coverage of transport networks significantly influences the costs of production and distribution (Aoki and Roberts,
2006).
In this context, the role played by seaports is critical, because around 80% of global trade is estimated to be
carried by sea (UNCTAD, 2008e). Thus efficient seaports can directly and indirectly contribute to the development of
an economy by facilitating trade and providing a hub for industry clusters, which may also provide backward linkages
in skills, technology and investment.
Technological innovation in transport has occurred mainly through the introduction of sophisticated
computerized handling systems in response to the need to manage the global increase in containerized trade. In general,
an integrated transport infrastructure offers a wider choice of transport options for users, which in turn encourages
greater competition and efficiency, resulting in lower transport costs to the consumer.
For a country to spread development throughout its economy, an integrated, multimodal transport network is
necessary. Landlocked countries, some of which are least developed countries (LDCs), have the additional burden
of relying on their neighbours to have such an integrated multimodal transport network to link them to the world
economy. Consequently, regional transport networks are a significant feature of investment in infrastructure across
Africa, Asia and Latin America.
Source: UNCTAD.
Box III.4. Main features of the water industry
All activities along the water industry supply chain extraction, transmission, distribution and supply involve
economies of scale. For this reason, the provision of water services typically involves high sunk and fixed costs
incurred by large scale centralized projects, and requires significant energy inputs. At the same time, the expansion
of services, the replacement or maintenance of existing facilities, and their adaptation to security and environmental
norms require large capital investments and considerable planning (OECD, 2007a).
Water supply has failed to keep pace with rising world population, leading to chronic shortages in several
regions of the world. This is however due mostly to problems with water management and investment problem, and
less to the lack of available sources of water. The gravity of the situation is reflected in the MDG declarations that
recognize water availability and access as a priority goal. Even in developed countries, affordability of safe water
among the poorer segment of society has become a critical issue. Moreover, it must be borne in mind that water is
used not only for direct human consumption, but also for economic purposes in agriculture and manufacturing. In
2000, only 10% of world water withdrawal took place for households. Industry accounted for 20% and agriculture
for 70%.
The scope of governments for introducing competition in the water industry is limited, although in principle
the extraction and retail supply segments could be made competitive. Water distribution remains a natural monopoly
because its main costs come from laying a network of pipes to deliver water, and it is economically not interesting to
introduce competition by duplicating the network. Moreover, unbundling is not always attractive due to the high costs
and problems associated with connectivity, and due to the fact that most of the costs of water still arise in distribution,
which is a natural monopoly. Considerations of water as a basic need can further add to the limits of unbundling.
Source: UNCTAD.
In developing and transition economies, these shares were 9% (households), 12% (industry) and 79% (agriculture). The calculation
is based on data from the Food and Agriculture Organization of the United Nations Aquastat database (http://www·fao·org/nr/water/
aquastat/). Data were used for 141 economies of the world for year 2000, and for 17 economies for the latest year available (between 2001
and 2006).