Infrastructure or Indulgence? The Real ROI of Public Investment

One side points to crumbling roads and digital divides. Another side points to large unfinished projects and government waste. But we're arguing about the wrong question.

This debate shouldn't be about whether public investment is valuable. Instead, it should focus on which investments deliver returns and which ones waste money with good intentions.

The Investment that Sells Itself

Broadband expansion is an easy sell. High-speed internet has become a necessity in daily life. It makes the difference between accessing telehealth or driving an hour to see a doctor, between attending school remotely or falling behind, between running a business from a rural town or watching opportunity concentrate in cities.

The pandemic made this brutally clear when millions of students sat in parking lots to access Wi-Fi for school.

Studies suggest that broadband access increases property values by 3-6%, boost employment rates, and enable remote work that keeps rural communities viable. The USDA estimates that rural broadband could generate $47 billion in increased economic activity. Pretty neat ROI right?

That's a return no investor would scoff at.

Broadband is the 21st-century equivalent of rural electrification. A project that brings highspeed internet to millions of American homes and transforms local economies for generations. It works on a strikingly obvious line of logic: connect people, and productivity follows.

Good public investment compounds.

The Mirage Projects

Not every infrastructure story has such obvious math. Many projects, although well-intentioned, become monuments of inefficiency and cemeteries of sunk costs.

Underused airports in remote regions. Empty train stations for political bragging rights. "Revitalization" projects that turn no where. These projects absorb enormous amounts of capital while producing limited lasting economic benefit.

Economists call this infrastructure misallocation: when funds go to ones that are politically convenient.

Politicians love ribbon-cuttings. Large projects look good for the press and campaign ads, but the real impact doesn't hold up. This results in a landscape dotted with an impressive outer shell but economically hollow underneath.

Wasteful investment loses more than money. It breaks public trust, and cripples the funding of genuinely high-return projects.

Measuring ROI of Public Spending

How can we differentiate between broadband and boondoggles? How do we tell the difference between infrastructure that benefits the future and projects that sink capital?

There are several frameworks we can utilize to quantify impact: cost-benefit analysis, social return on investment (SROI), and dynamic multipliers. These measure how each dollar of spending ripples through the broader economy, or in other words the overarching/long-term impact of public investment.

These tools, while useful, often struggle to reality: benefits of infrastructure can take decades to show up in GDP data, and it is often challenging to pinpoint particular causes.

But, the patterns are still prevalent. Public investments that reduce transaction costs, connect people and markets, or enhance human capital yield compounding returns.

And by contrast, projects fueled by vanity or prestige rarely change the long-run growth trajectory.

A productive public investment behaves similarly to venture capital: high upfront cost, uncertain payoffs, but enormous upside if it succeeds. Governments, however, can afford to take these bets when private markets can't.

The Case for Smart Public Capital

The big idea, then, is that governments don't need stop investing. They should instead invest smarter.

That means focusing on areas where private capital labels as "too risky", but social value is high. Nuclear energy. Climate-resilient water systems. Public data platforms.

Each of these sectors hold large positive externalities. And that's exactly where public money should flow.

When public capital is allocated with the same discipline as personal finances, it can transform economies.

ROI Mindset

In an era where fiscal space is limited and global competition is fierce, the old "spend or don't spend" debate misses the point. The real challenge is to build a public sector that thinks in returns for the greater good of society. One that understands that the best investments are often not the loudest.

The real infrastructure crisis isn't concrete or fiber optics. It's mindset and priorities.

References

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American Society of Civil Engineers. (2021). 2021 report card for America's infrastructure. https://infrastructurereportcard.org/

Atasoy, H. (2013). The effects of broadband internet expansion on labor market outcomes. Industrial and Labor Relations Review, 66(2), 315-345. https://doi.org/10.1177/001979391306600202

Council on Foreign Relations. (2024). The state of U.S. infrastructure [Backgrounder]. https://www.cfr.org/backgrounder/state-us-infrastructure

Glaeser, E. L., & Poterba, J. M. (2020). Economic analysis and infrastructure investment (NBER Working Paper No. 28215). National Bureau of Economic Research. https://www.nber.org/papers/w28215

Glaeser, E. L., & Ponzetto, G. A. M. (2018). The political economy of transportation investment. Economics of Transportation, 13, 4-26. https://doi.org/10.1016/j.ecotra.2017.11.001

Lehrer, E. (2014, April 13). We don't need another 'bridge to nowhere.' Brookings Institution. https://www.brookings.edu/articles/we-dont-need-another-bridge-to-nowhere/

New York Times. (2020, May 5). Desperate for Wi-Fi, many have nowhere to go but a parking lot. Baltimore Sun. https://baltimoresun.com/coronavirus/sns-nyt-desperate-for-wifi-using-parking-lot-20200505-77uksiyrsnch7pqaauju5dgxri-story.html

OECD. (2018). Cost-benefit analysis and the environment: Further developments and policy use. OECD Publishing. https://doi.org/10.1787/9789264085169-en

Soh, H. S., Koh, Y., & Aridi, A. (Eds.). (2023). Innovative Korea: Leveraging innovation and technology for development. World Bank. https://doi.org/10.1596/978-1-4648-1961-2

The Pew Charitable Trusts. (2025, May). State and local governments face $105 billion in deferred maintenance for roads and bridges [Issue Brief]. https://www.pew.org/en/research-and-analysis/issue-briefs/2025/05/state-and-local-governments-face-105-billion-in-deferred-maintenance-for-roads-and-bridges

U.S. Department of Agriculture. (2019). A case for rural broadband: Insights on rural broadband infrastructure and next generation precision agriculture technologies. https://www.usda.gov/sites/default/files/documents/case-for-rural-broadband.pdf

World Bank. (2014). Finland as a knowledge economy 2.0: Lessons on policies and governance (Directions in Development). World Bank. https://doi.org/10.1596/978-1-4648-0194-5