The infrastructure (transport) is essential for the economic development of a region. If we are taking into consideration the tourism industry and other tourist activities, the importance of the infrastructure is higher, due to the fact that the attractiveness is increased by the comfort and the easiness of reaching the targeted places. The public administration plays a huge role in developing projects for improving the infrastructure or for rehabilitating it. We are presenting different situations and the roles played by the public authorities together with the options they have for public investment projects.public administration, infrastructure, economic development

Grigorescu, Adriana

English

Research Papers in Economics

PAPER PRESENTED:
Third International Scientific Conference entitled: “Effectiveness of Material and Immaterial 
Resources Exploitation in Order to Impart Dynamism of Regional Development” organized 
on October 19, 2006, Higher School of Regional Economy Management and Tourism in 
Kielce, Poland
PAPER PUBLISHED:
Review Regional Development and Tourism, Volume 4/2006, ISSN 1733-4314
Adriana Grigorescu, Ph.D., Associate Professor 
National School of Political Studies and Public Administration, Bucharest, Romania
PUBLIC ADMINISTRATION ROLE IN 
INFRASTRUCTURE DEVELOPMENT 
Abstract:
The  infrastructure  (transport)  is  essential  for the economic  development  of  a  region.  If  we  are  taking  into 
consideration the tourism industry and other tourist activities, the importance of the infrastructure is higher, due 
to the fact that the attractiveness is increased by the comfort and the easiness of reaching the targeted places. The 
public  administration  plays  a  huge  role  in  developing  projects  for  improving  the  infrastructure  or  for 
rehabilitating it.  We are presenting different situations and the roles played by the public authorities together 
with the options they have for public investment projects.
1. INTRODUCTION
As it is mentioned above, the impact of infrastructure (transport and facilities) influences the 
economic development of a specific region. Sometimes the effects are unpredictable and in 
the case that the area is economic dependent on a specific sector (tourism for example) these 
could be stronger. Unfortunately the private investors and stakeholders are not interested in 
investing  money  in  infrastructure  development,  due  to  the  fact  that  the  rate  of  return  is 
unsatisfactory in these cases.
The development, maintenance and rehabilitation are the duties of the public administration 
structure. One of  the  concerns for  the  public  administration  is  the  funding  of  these 
infrastructure investment projects.
Starting from a briefly description of a Romanian region (ANDR 3 - Sud Muntenia
1), one can 
see that the infrastructure development is a compulsory condition for economic development 
and it is easier to highlight it on tourism.
                                               
1 Note: The country is divided in  8 regions and each  one  has a  branch  of  Romanian  National Agency for 
Development.2. CASE STUDY OF ROMANIAN ANDR 3
2.a. Development of transport infrastructure
At present, the road transportation in a steady development during the last years, is becoming 
the leader in this field also because of the railway transportation decline. ANDR 3 has a 
network  of  4  international  highways  and  the  future  Constanţa-Bucureşti-Oradea  highway, 
which  will  be  part  of  the  pan-European  transportation  network. Thus  ANDR  3  has  the 
advantage of a good internal and international connection. 
The initial national road network (21.2% of 11,818 km total length), mainly modernized, 
assures a good connection especially between the towns, offering a  good access to and from 
different  important centers  as Bucharest-the country capital,  seaside harbor-Constanta  etc.
The connections with the inner country, which is inside of Charpatian Arch, are assured by 4 
passages:  Prahova  Valley  (road  and  railway);  Olt  Valley  (road  and  railway);  Rucăr-Bran 
(road); Transfăgărăşan (road – accessible only during Summer time).
In comparison with the generally satisfactory technical state of the national roads network, the 
countryside  roads, covering  78.8  %  within  the  network, are mostly  unsuitable. This  fact 
affects the road traffic and has a major negative impact on the rural area.
Road transportation is doubled by the railway transportation on 4 main lines which assures 
connections with all the historic regions: Moldavia, Dobrogea, Transylvania and Banat.
Within ANDR 3 there is no civil airport for passengers and cargo, but it could be used the 
biggest airport of Romania-Bucharest Otopeni, placed at a distance of about 60 to 120 km 
from the centers of the regions counties.
The water transport, unfortunately in a steady decline after 1990, is assured by the Danube 
river, the main trans-European water way. ANDR 3 has the advantage of 4 important harbors: 
Turnu Măgurele, Olteniţa, Giurgiu, Călăraşi.
The border line that this region includes is between Romania and Bulgaria and has three 
passages. The most important of these passages is Giurgiu-Ruse that has a highway-railway 
bridge, an important point of connecting Western Europe with the Near East.
2.b. THE DEVELOPMENT OF TECHNICAL INFRASTRUCTURE
Within the region the water supply network sources originate in surface and underground 
water collection. A length of 6,299 km of water supply network feeds a number of 454 sites 
(cities, towns, villages, s.o.) with current water.
The water supply network, especially on the urban area, has an advanced level of degradation 
and usual do not meet the water requirements at present.Sewage network for the home waste water are underscored and mostly deteriorated. It covers 
about 94 sites out of which 42 are towns. The purging of home wasted waters is another major 
matter caused by the unsufficient, old and overused equipment and technologies.
The electric energy supply is not a problem it reaches a 99% of the region and covers 100% 
the urban areas. 
The region has a good telecommunication network that has a high coverage which allows the 
access of the region inhabitants to modern communication systems.  
Natural gas network with a length of 1,734 km supplies a number of 128 localities out of 
which  31  are  towns.  Unfortunately its  expansion  is  fairly  slow  because  of  the  high  cost 
involved by this investment.
Thermal  power  distribution in  centralized system is present mainly in  urban  centers  and, 
during last years is declining due to the high cost of production and transportation. Now this 
type  of  system  is  replaced  by  smaller,  more  efficient  systems  grafted  on  the  natural  gas 
network.
2.c. ENVIRONMENT PROTECTION EVOLUTION
The  environment  quality, estimated  by the evaluation  of  the  individual  components  (air, 
water, ground, forestry etc.), fluctuates consistently around the region. In respect with this, 
after 1990 the environment was improved as a result of the increased investments  in the 
environment protection, improvement and enforcement of regulations and by diminishing and 
even putting to an end the pollutant industrial outcome.
Northern part of the region, highly industrialized, concentrates industrial mining activities 
which are great sources of pollution, due to the old technologies used. These generate the 
biggest damages for all environmental elements.
Within this part of the region, Prahova county, the most industrialized county of the country, 
has the highest  level of air and soil pollution. At the same time, the unsuitable technical 
condition  of  waste  waters treatment  plants causes  the  existence  of  biological  and 
microbiological high pollution of the rivers.
The agricultural areas from the South of the region, due to the low industrialization are less 
polluted  but  suffer  from  other  environmental  elements  of  degradation:  erosion, lack of 
nutrients and chemical pollution. All this have a negative impact on the agricultural activity 
and the quality of life.
A  special  problem  is  the  dumping  of  home  and  industrial  waste. The  region  has few 
ecological waste dumping places and this are usually placed nearby urban centers. Till now,the  region  has  no  modern  and  complex  system  of  waste  dumping able  to  collect,  select, 
process and incinerate or recycle the wastes.
2.d. EFFECTS ON TOURISM EVOLUTION
During  the  last  years  the  tourism  proved  to  be  an  important  source  of  socio-economic 
revitalization of the region. The region has a substantial potential, mainly on the Northern 
part, for tourism and recreation activities, due to the existing natural favorable conditions and 
cultural and historical tradition.
The main points of attraction are the mountain resorts from Prahova Valley - Masivul Bucegi
for winter sports, mountaineering and weekend tourism. These are well equipped with modern 
hotels  and  adequate  infrastructure  for  tourism. All  these  facilities  in  Prahova  Valley are 
usually overcrowded, while Ialomiţa Valley, placed on the other side of the mountain range is 
now under development. These parts of the county is attracting investment for building up 
hotels and other facilities for tourism and the development of new resorts (Peştera).
The  spa  tourism  takes  place  in  3  watering  places.  The  present  accommodation  and  spa 
facilities and quality of services are low. The increased number of tourists registered lately in 
Pucioasa Spa is due to the beginning of a rehabilitation and development process.
The region is attractive for tourism as it has cultural-historical monuments and national parks 
in Bucegi  and Piatra Craiului Mountains  that could be  shown. The access  to all  these is 
facilitated by the transport infrastructure.
In comparison with the Northern part, the South part of the region, especially the river-side of 
Danube has a great potential, unexploited potential for tourism that could be, under proper 
and sustained investment, an alternative to classic mountaineering.  
In the Southern part of ANDR 3, the tourism development depends on the development of 
water and road transportation necessary to allow a rapid access to the existent potential of 
tourism.
3. FUNDING SOURCES FOR INFRASTRUCTURE INVESTMENT PROJECTS
The infrastructure projects require high amounts of money to be developed. Romania has 
unsufficient governmental sources for this kind of investments. That’s why it is necessarily to 
attract foreign funding from various sources. Among the most important sources for funding 
the  infrastructure  investment  projects are  the  international  financing  programs,  structural 
funds and specialized banks. We shall describe below these important sources of financing for 
our case.
3.a. INTERNATIONAL FINANCING PROGRAMSPHARE has tree main objectives:
- the consolidation of public administration and institutions of the integration candidate 
states, in view of making them functional within the European Union (institutional 
development);
- support  of  the  candidate  states in  their  investment  effort  for  lining  up  industrial 
activities and infrastructure to the EU standards (investments for the support of the 
acquis communitaire implementation);
- the promotion of economic and social cohesion (investment in key sectors for the 
region development).
ISPA (Instrument for Structural Policies for Pre-Accession) is funding, during 2000-2006,
infrastructure  projects  in  the  field  of  transportation  and  environment  protection. ISPA
objectives are:
- the  support  of  beneficiary  countries  to  reach  the  European  Union  standards  for 
environment;
- expansion and connection of transportation networks of the beneficiary states to the 
trans-European ones;
- accustoming  the  beneficiary  countries  to  the  policies  and  procedures  applied  to 
Structural and Cohesion Funds of European Union
SAPARD (Special Pre-Accession Program for Agriculture and Rural Development) supports 
the candidate countries to adopt structural reforms in agriculture and other fields of rural 
development,  as  well as  the  implementation acquis communitaire regarding the  Common 
Agricultural Policy.
“Romania found out four priorities fields to be financed by this program:
- manufacturing and trading of agricultural, fishery produces;
- development and improvement of rural infrastructure;
- human resources development;
- rural economy development.”
2
3.b. STRUCTURAL FUNDS  
Structural funds and cohesion funds are financial instruments of the community economic and 
social cohesion policy, aimed to support the diminishing of the gap between the development 
                                               
2 European Union Integration ABC – European Union Assistance for Romania, Ministry of Integration, 2004of different region of the member states of the European Union, promoting thus economic and 
social cohesion.
“At present, the European Union has four structural funds: European Social Fund (ESF),
established by  the  Roma  Treaty; European  Fund  for  Agricultural  Orientation  and 
Guaranty  (EFAOG), established in1962; European Fund  for  Regional  Development
(EFRD),  established in  1975; Financial  Instrument for  Fishing  Orientation  (FIFO), 
established in1993”
3.
During  1994-1999 period the  Structural  Funds  were  granted  under  the  condition  of  the 
observance of programming, focalization, partnership and supplementarity for 7 objectives 
and 13 initiatives.
In  view  of  the  improvement  of  the  community  actions  efficiency  during  2000-2006,  the 
Commission proposed in the “Agenda 2000” from July 1997, a reform of structural policies.
This reform  allowed  a  better  focusing  and  a  simplification  of  the  operation  way  of  the 
assistance by reducing the number of objectives to only three:
“Objective 1 – structural development and adjustment of the underdeveloped regions with a 
GDP under 75% of the European Union average. 70% of the Structural Funds are dedicated to 
this objective.
Objective 2 – economic and social reconversion of the regions in structural difficulties. This 
objective covers the region in difficulty from the economic diversity point of view as there are 
the regions where the economy is crossing a stage of deep changes, declining rural regions, 
regions dependent on fishery under the crisis and urban region in difficulty. Human resources 
development in other regions than those eligible for Objective 1.
Objective 3 – Is the reference framework for all the measurements provided by the new Title 
regarding  the  human  force  employment  under  the  Amsterdam  Treaty  and  the  European 
Strategy for Human Resources employment”.
4
The European Commission is under a process of reorganizing and restructuring the Structural 
Funds.
3.c. BANKING SOURCES
The International Bank for Reconstruction and Development (IBRD)
                                               
3 PHARE Program 2002, Glosary of terms – Economic and Social Cohesion
4 idem 3IBRD is better known under the name of World Bank. A loan from the World Bank can be 
granted, with the exception of special cases, for well defined projects from country members.
The project assisted by the World Bank loan has to be sound from the technic and economic 
point of view and to be of great priority for the economic development of the country.
The Bank has to be sure that the project will be well managed both during its implementation 
and after its completion. It has to have a reasonable guaranty that the loan will be reimbursed 
and that it will not be a real burden for the economy of the applicant country.
The  detailed  follow up  of  the  project  by  the  World  Bank  is  one  of  the  most  important 
conditions of its efficiency and insures both the recipient and the creditor that the funds are 
used only for the precise aims of the funded project.
European Bank for Investment (EBI)
EBI is a financing institution of the European Union created under the Roma Treaty in 
1958, located in Luxemburg and its members are the European Union member states that 
subscribed to the bank equity. Its mission is to support the U.E. objectives by financing long 
term specific capital projects.
European Bank for Reconstruction and Development (EBRD)
EBRD was established in 1991, in London. EBRD supports investment for the establishment 
of the market economy and democracy in 27 countries from The Central Europe to the Central 
Asia.  The  EBRD  stakeholders  are  60  states  and  2  inter-governmental  organizations.  The 
EBRD funding is oriented especially to the private sector. It also supports the public sector 
mainly for privatization, restructuring and public services improvement.
4. CONCLUSIONS
As one could see in chapter 2 – Case study ANDR 3, there is a clear and implicit connection 
between the state of the infrastructure and the other utilities and the economic development
(the tourism included) of the region.
The Northern part of the region (Prahova Valley) characterized by a good industrial level has 
also a transport infrastructure and other utilities networks well developed. As a consequence it 
has the power to turn into account its potential for tourism. 
As a feed-back the tourism development stimulates other economic sectors in the region that 
leads to the global development of the region.
The peak of this development determines the transfer of the attention to the similar potential, 
long time forgotten, of the next valley – Ialomiţa, for its turning into account. This trend visible in the Ialomiţa Valley functions on the principle of communication vessels due to the 
maximum exploitation of the neighboring valley.
The Southern part  of the  region,  unfortunately mainly  agricultural,  has  not fully  used its 
potential in tourism because of its low level of development. The turning into account of good 
potential for tourism needs high investments that the region can not afford. The efforts to 
attract foreign investment were not successfully mostly because of the weak development of 
infrastructure.
Public administration should pay more attention to the development of the infrastructure and 
other utilities for the regions with good potential in tourism. They should attract more funds 
for  supporting  the  infrastructure  investments  using  better  the  above  mentioned funding 
sources and others.
The investment to develop infrastructure and public utilities are not attractive as the rate of 
return means long terms, do not generate profits and in the most cases no income, as direct 
forms of return.
Also  there  is  clearly  an  indirect  form  of  return  on investment,  shown  in  Figure  1. The 
existence of a suitable transportation network and utilities (water, sewage, gas, electricity, 
communication etc.) foster the economic development and increases the attractiveness of the 
region. A hidden potential of tourism can be so turned into account. 
The economic development has, as a direct consequence, the growth of companies and the job 
creation, reflected in the increasing of profits and individual earning. The taxes, for the central 
and local budget, collected from companies and individuals are the indirect forms of public 
Public 
administration
Economic 
development
Infrastructure 
investments
Public utilities
investments
Companies Individuals
Figure 1. The indirect return of the public investments
funds funds
taxes
Societal 
effectsinvestment recover. As much as the public administration attention will be focused on the 
investments  in  infrastructure  and  utilities,  the  tax  volume  will  be  higher,  societal  effects 
adding to them.
REFERENCES:
1. Beldean V.,  Popescu D.,  2004,  Project  Management with  international  financing,  Editura  Matrix  Rom, 
Bucharest;
2. Grigorescu  A.,  2005,  Project  Management – Utility,  Methodology,  Finality,  Editura  Politeia-SNSPA, 
Bucharest;
3. ***, 2004, European Comission Development DG – Project Cycle Management Guidelines, Bruxelles;
4. ***,  2004,  European  Union  Integration  ABC  – European  Union  Assistance  for  Romania,  Ministry  of 
Integration; 
5. ***, Law no. 315 dated 28 June 2004 regarding the Romanian regional development  
6. ***, PHARE Program 2002, Glosary of terms – Economic and Social Cohesion
7. ***, Regional Development Plan for Region 3 Sud Muntenia 
8. ***, www.europa.eu.int

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