Dr. Simeon Djankov:

Indeed, and we are more nuanced in the report. For different economies one requires different mixes between investments in physical infrastructure and human capital. New technology, however, sometimes allows us to invest in different new ways in physical capital. One of the countries that I visited recently was Senegal. Much of Senegal has not been electrified. There is no electricity in about 70% of the country. By the way, Senegal is one of the richest countries in Africa so this is not among the most difficult cases. They were thinking about physical infrastructure in the following way. To have electricity, one needs to have the electricity poles and to have that one needs to have roads, so they decided to build roads first and then they will install the electricity poles and then they will bring the electricity to the hospitals and the schools and then they will think of broadband and so on. I already mentioned the case of Vietnam, where electricity is generated from solar panels and Senegal is blessed with lots of solar energy so that one can at least temporarily short-circuit the process and bring electricity where it is needed in hospitals and schools and so on, and provide the broadband through it so that the next generation can start developing. In the meantime, they still need the roads for commerce to develop, for people to be able to move. It is just a question of how to use limited resources and what is the optimal mixture. Until recently nearly 90% of the Cohesion Funds was used for infrastructure by the Bulgarian Government because Bulgaria needs a great deal of infrastructure. The new thing we are bringing is to think of the mix, so to prepare the next generation, one does not need huge investment. The order of magnitude of investment in primary education is 0.5% of GDP on average or 0.7% of GDP. Infrastructure in the average country is 6% to 7% of GDP. The mix can be done in such a way that one thinks of current business and commerce but also future business. That was my point.