Abstract

The exact type, critical mass, and combination of public and private assets needed to move out of poverty have not been sufficiently studied. This paper analyzes three types of public infrastructure and services: a) “traditional infrastructure ” such as transportation, sewer systems, water, electricity which do not generate positive network externalities; b) «human-capital-generating public services » that are capable of creating mobile private assets, such as schooling and health services and c) «information and communication technologies», such as telephone or Internet, all of which generate network externalities. Using Peruvian LSMS data we quantify the differential impact on poverty of each of these types of investments, as well as the interaction effect between so- called traditional types of infrastructure and those which generate network externalities.