Infrastructure and rural development: US and EU perspectives

Infrastructural development remains a cornerstone of rural development policy in both the United States and Europe. It is evident that rural development objectives differ, but similar policy measures are used. The economic rationale for infrastructure development centres on efficiency and creation of competitive advantage. Policy intervention is justified because of the added costs of infrastructure provision in remote, sparsely populated areas. Although this policy focus does not guarantee success, regions leading in economic development typically have better physical infrastructure. In the United States, policy must adapt to challenges posed by an ageing rural infrastructure and demographic change that will increase demands on social infrastructure such as housing and health facilities. There will be greater local responsibility for funding, and expanded use of public/private partnerships. In the European Union, the major challenge is in redirecting resources to new member states, where there is urgent need for both large new investments in transport networks and small investments to improve local access. Although two current options for funding these diverse needs focus on European policies only, investments in non-farm physical capital and public infrastructure cannot be sustained without active national policies to complement the European efforts, perhaps through co-financing requirements.