Poverty Reduction through BOT-Based Infrastructure Development

The connection between the development of effective infrastructure and poverty reduction has been well documented, and reinforced by several econometric studies, which demonstrate a definitive linkage between economic growth and infrastructure development (Calderon). As a result, techniques for infrastructure development may also be used as tools to combat poverty. Among these techniques is the Build-Operate-Transfer (BOT) methodology, which is a mode of infrastructure development in which a private corporation develops infrastructure, for profit, at the request of a government. Under this scheme, the infrastructure is transferred to the government at a later date, after the investment of the private corporation has been recouped (Levy, 18-23).

BOT offers a number of exciting opportunities for industrial development and poverty reduction, not least of which is its ability to bring to bear corporate competitiveness on the problems of the public sector. Additionally, there is significant support for BOT projects in developing countries. These projects allow developing nations to circumvent economic problems that would otherwise render public sector construction of necessary infrastructure wholly impossible (Levy 24).

BOT is not, however, a cure-all, and, as with any useful technique, has its drawbacks. BOT projects are very long term, often lasting as long as 30 years, meaning that unforeseen risks may derail BOT projects ( Walker 152). In addition, BOT projects rely on an agreement between a private company and a government. The negotiation of such agreements takes time, and can stop a BOT project before it gets started. The difficulties of BOT projects counterbalance the benefits BOT offers, and make the responsible promotion of BOT programs a difficult and delicate issue, which bears careful consideration.