Rebuilding Macroeconomics: Trajectories of Infrastructure Financing and Macroeconomic Policies in Practice
Rebuilding Macroeconomics: Trajectories of Infrastructure Financing and Macroeconomic Policies in Practice (ESRC, 2019-2020)
Principal Investigator: Dr Elisa Van Waeyenberge
Co-Investigators: Dr Kate Bayliss and Dr Benjamin Bowles
During the Autumn 2018 budget presentation, the Chancellor of the Exchequer announced the end of Private Finance Initiative (PFI) and (its short-lived successor) Private Finance 2 (PF2). At the same time, the government reaffirmed its ambitious upscaling of infrastructure with a ten-year £600bn infrastructure pipeline, half of which is to be financed by the private sector. This research project takes the apparent contradiction between the abolition of PFI/PF2 and the continued official commitment to private finance in infrastructure as its point of departure. Deploying an interdisciplinary approach across economics, social anthropology and political economy, we will examine changes in the trajectory of private finance in infrastructure policymaking. More specifically, we will analyse how privately financed infrastructure is designed and implemented across sectors. This raises a set of further questions. How do private finance options for infrastructure emerge from within the government apparatus? What analytical and policy paradigms govern these trajectories? What are the rationales for adopting private finance in some areas but not others? What particular theoretical (including from macroeconomics) and ideological frames are mobilised in these decision-making processes? What cultures of expertise prevail, to what norms of policy practices do these give rise, and with what roles and outcomes for different stakeholders?
Traditional macroeconomic approaches to infrastructure draw attention away from the financial, political and economic realities within which infrastructure policy and practices take form. These realities have, nevertheless, important implications for the way in which infrastructure policy is designed, delivered and takes effect. Infrastructure policy and practices are not just a matter of how much (infrastructure’s quantitative dimension as an additional source of demand creating employment and output), but also of what (infrastructure’s links to productivity and growth), and, crucially, of how (capturing the processes of financing and delivering infrastructure). Anthropologists insist that contrary to traditional macro understandings, infrastructure, and the financing thereof, is never politically neutral or simply “technocratic.” Decision-making regarding its policy and practice effectively and inevitably promotes some interests over others.
Proposing an innovative interdisciplinary research framework, our study draws on the Systems of Provision (SoP) approach, originally developed by Fine and Leopold (1993). A SoP analysis requires unpacking the chain of interactions between agents that underpins the provision of a particular public service, and an investigation of the specific norms of provision and cultures to which these interactions give rise. Applying the SoP approach to infrastructure finance in the UK will connect material dimensions, such as financial flows, nature of agents and institutional structures, with cultural elements – such as understandings of agents, prevailing policy narratives and mainstream disciplinary and policy cultures. This will highlight significant determinants of infrastructure policy outcomes which are neglected in traditional macroeconomic approaches.
The project will generate important policy lessons as it will identify the drivers of private infrastructure finance, across sectors. These issues take on significance beyond the UK, given the large- scale promotion of private finance in infrastructure across the world, particularly in the Global South, not least in the context of the post-2015 development agenda.