Q&A · 8:41-9:21

Infrastructure spending can leak through lost industrial capability

British rail procurement illustrates how selling domestic designs can turn later infrastructure spending into imports.

Question

Does infrastructure spending help keep money within the country where it is spent?

Short answer

Yes, although importing trains based on designs previously sold abroad sends part of that spending overseas.

Notes

Domestic infrastructure spending can support national industry, but the benefit depends on where the equipment is manufactured. British rail procurement supplies the example: designs developed to suit an early railway network are sold abroad, then trains based on those designs are bought back when Britain needs them. The criticism concerns losing the ability to supply a domestic requirement after doing the original development work. Infrastructure expenditure can consequently generate manufacturing income overseas even when the railway itself remains in Britain.