Infrastructural development is a large part of many countries’ budgets and political agendas. The aim of infrastructural development is to help improve the lives of people in that country by increasing access, providing necessary services, improving traffic, and generally making the country more efficient and easier to live in.
What is Infrastructure?
The word infrastructure can be used to describe a wide variety of things from multi-billion dollar roadways and tunnels to the piping that brings water into your home and the telecommunication networks around the cities. In this sense, one may define infrastructure as a fundamental system of interconnecting components which provide a framework for a larger network of facilities that support the sustainability and the functionality of societies. When people talk about “infrastructure” more specifically, they refer to public works projects such as roads, bridges, railways, and airports which have been large government expenditures in recent years. These have been seen as key components in economic development because physical links between places help workers get products to market quickly and cheaply
In general usage though, some feel that words like infrastructure minimize the importance of those more specific definitions by being overly broad and abstract. This has led to a general lack of clarity in the way people have thought about infrastructure, at least from a political standpoint.
The word itself can be traced back to old French and Latin roots which just mean “foundation”. In more modern times though, it has been used to describe these large-scale projects that exist on a government level. The term became popular during the 1930s when Franklin D. Roosevelt introduced his New Deal program as an attempt to lift America out of the Great Depression with construction programs like the Civilian Conservation Corps (CCC) and the Works Progress Administration (WPA).
In more recent times, there has been discussion in the U.S. and other western countries about how things like roads and bridges can be funded in a sustainable way so that future generations do not have to carry such a large cost. This seems especially important in light of current events with skyrocketing federal debt and questions about whether projects such as high-speed rail systems, for example, will ever be completed. The US National Surface Transportation Policy and Revenue Study Commission released a report in December 2009 suggesting that the government should explore the possibility of raising new revenue by partnering with private investors.
What is Infrastructural Development?
Infrastructural development is the creation and expansion of basic fundamental services such as roads, railways, power lines, pipelines, health care centers, schools, etc for economic growth and development. This is essential for society to function efficiently and enables commerce to take place, allowing goods to be transported quickly from one place to another, and a good standard of living.
Infrastructural development also includes the modernization or rehabilitation of infrastructure that was initially created many years ago (i.e.: building a modern road on an old road or expanding the existing road). This can oftentimes make infrastructure much more efficient and benefit those who live near it.
Components of Infrastructural Development
The components of infrastructural development include:
- Housing Infrastructural development
- Energy Infrastructural development
- Transportation Infrastructural development
- Water and Sanitation Infrastructural development
- Information and Communication Technology Infrastructural development
Housing Infrastructural Development
Housing is an important component of infrastructural development. It is the responsibility of several government departments to develop appropriate housing for their people. This includes providing proper shelter and suitable living conditions, which can be achieved through good planning and design.
The need for housing varies by country, depending on how developed or undeveloped it is. There are different types of housing that are categorized by the availability of infrastructure. For example, in highly advanced countries like Japan, there has been a shift towards urbanization, which means denser cities with more fast-paced lives. Because this type of lifestyle requires many amenities such as grocery stores and public transportation systems, people prefer densely populated areas where all their needs can be met within walking distance or short driving distances.
Related to housing, infrastructure is an important aspect of living conditions. Infrastructural development, which is integral for all industries, was not commonly concerned with the development of homes until recently. As urbanization has increased in countries across the globe creating a need for more streamlined housing infrastructures, over the past two decades there have been significant investments into developing housing infrastructure projects. Governments are realizing that without proper areas to live, and maintain jobs and businesses then society will be at risk economically. Housing forms part of many other interrelated economic systems but also creates fragmented communities which can pose problems in the long term if not understood properly by policymakers.
The provisioning of affordable housing infrastructure development depends on several factors including population density, demand, and supply within a given time period being among the chief factors. The development of housing infrastructures is not often thought about as an economic benefit; however, it can be argued that housing infrastructure includes public transportation which forms part of the backbone of any economy. According to a report by Journalist’s Resource (2017)
“A strong public transit system does more than provide people with access to jobs and activities. It also boosts economic activity.” In this respect, it can be understood that housing infrastructure investments have a significant role to play in economies across the globe. Without reliable housing systems, most industries would suffer from having limited access to their employees and vice versa. This creates a need for governments to look at how they plan on developing these types of policies moving forward.
Energy Infrastructural Development
Energy Infrastructural development is a key to economic growth and advancement. Among the different types of infrastructure, energy infrastructures are important. Energy infrastructures include both power generators and fuel supply pipelines. These can be categorized into renewable energy sources such as solar panels and wind turbines, or non-renewable sources such as coal plants and petroleum refineries. These have a major role in the economy, and hence make up part of the infrastructure on which the economy functions.
The economic benefits of Energy infrastructures can be assessed using return on investment (ROI). ROI refers to how fast the initial investment will get returned and is expressed as a percentage rate. This can be calculated by taking one plus the cost-benefit ratio:
5% = 1 + (0.05)
20% = 1 + (0.2)
45% = 1 + (0.45)
A high ROI means that initial investments would be quickly recovered and investors can expect returns within this period of time. However, it’s important to note that the ROI is usually towards the lower end of the scale in mineral-rich countries. Investors are willing to take on greater risk when it comes to investing in these countries, due to possible large returns over time when compared to safer investment areas with considerably less risk. This offsets the relatively low ROI provided by this type of infrastructural project.
However, why should people invest in energy infrastructure projects? Why not just put money into other sectors which offer higher returns? The answer lies in Infrastructure strategy, where there’s a synergy between different types of infrastructures that complement each other. For example, an effective transport system would require both roads and railways, where one can’t function without the other. Similarly, power plants need fuel pipelines for coal or natural gas, which both come from non-renewable sources. This allows investors to not only profit in this sector, but also invest in other infrastructures such as transport and housing.
A great example of the synergy between different sectors is China’s grand strategy known as the Chinese dream. The Chinese dream consists of a two-fold approach where the government invests in developing multiple infrastructural areas while at the same time redeveloping some of its current facilities to make them more efficient. This aims for a strong balance between economic growth and environmental sustainability, with a clear direction toward future development plans.
Transportation Infrastructural Development
Transportation infrastructural development is the process of building, improving, and repairing transportation facilities, such as roads, railways, airways, etc.
This is a crucial step in an area’s economic development which contributes to the growth of the said country. Transport Infrastructure investments are considered to be very important for economic growth due to their major role in increasing productivity and making countries more competitive in international markets. A report published by International Monetary Fund (IMF) states that every 1% increase in GDP driven by construction activities results in an increasing employment rate by 0.6%.
Transportation is an integral part of the economy. Some might even suggest that it drives economic growth (and sometimes also poverty). As a result, governments at all levels usually work hard to ensure that they have adequate transportation infrastructure in place or under construction so as to not impede or inhibit economic performance. The types of transport infrastructures available for use tend to vary across countries and continents, but roads are usually always available while other less common types of transport infrastructures include railways, waterways, seaports, airways, and pipelines.
The provision of transport infrastructure can be difficult because not enough attempt has been made to determine exactly what kind of investments are needed where and when. For example, some rural areas may require better road access than cities despite the fact that cities tend to have a higher volume of traffic. In some cases, one city may have enough money to fund its own infrastructure projects while other nearby towns cannot afford the same. In those cases, it would be more prudent for central governments or states/provinces to pay for those additional infrastructures so as to allow all citizens equal access and opportunities in life.
Water and Sanitation Infrastructural Development
Drinking water supply and sanitation are key to improving public health, and living conditions and ultimately promoting economic development in both developing and developed countries. In 2008 the WHO/UNICEF Joint Monitoring Programme for Water Supply and Sanitation estimated a global ‘sanitation crisis, with 2.6 billion people not using an improved sanitation facility of any kind, 892 million lacking access to improved drinking-water sources (WHO et al., 2010).”
In an effort to meet these challenges many governments around the world prioritize policies that integrate the provision of safe water supply and sanitation infrastructure into overall sector planning. As such investments in water supply, sanitation, and hygiene (WASH) contribute significantly to achieving social goals such as poverty alleviation, social empowerment, improved education, and health.
The Infrastures in this sector is particularly useful in linking the achievement of the Millennium Development Goals (MDG) to other strategies such as national health policies and programs, agricultural development plans, economic diversification plans, and environmental conservation measures. For example, sanitation facilities would allow for better hygienic practices that reduce child mortality rates through diarrheal diseases.
The World Bank states that “Water and sanitation have a tremendous positive impact on the economy. [The company calls for studies of research to be used or altered if desired; then they give two studies that support this statement.]
A study by the World Health Organization (WHO) found that good water supply and sanitation can add 5-10%age points to a country’s annual economic growth. A study by the Department for International Development (DFID), which was commissioned through the UK government, found that poor water supply and sanitation infrastructure cost developing countries US$223 billion/year in lost productivity.
Water and sanitation as a component of infrastructural development play an important role in accelerating economic growth by raising productivity. Solid research proves this theory. However, policies must be carefully crafted if they are to yield positive results according to the World Bank; “Economic policies have to be appropriate for a country’s level of development”.
Conclusively, therefore, good water supplies and sanitation infrastructure increase economic growth because they raise labor productivity by reducing health costs.
Information and Communication Technology Infrastructural Development
Information and communication technology is described as the use of computing and telecommunications technologies to store, retrieve, transmit and manipulate data—for example through mobile phones, computers, etc. Simply put it is the use of any technology that involves storing, retrieving, and communicating information. According to recent studies by some leading consulting firms including McKinsey & Company, 93 percent of the world’s top CEOs believe that IT will be fundamental for their company’s future success. This statistic alone shows just how important this sector has become in today’s business world. Nkomo Mukunda, a lecturer with Makerere University Business School (MUBS), says IT has improved productivity with regard to transportation.
Information and communication technology infrastructure is crucial in the development of every nation. The quality of this infrastructure can make or break a country’s economic growth and stability. For years, the majority of financial investments worldwide have been directed toward improving these infrastructures in developing countries—turning it into one of the most important ways to promote global social welfare.
The basic idea behind investing in this component of infrastructure for any country is that building up this sector will lead to increased productivity at both microeconomic and macroeconomic levels among other things. This means that governments are able to boost their gross domestic product (GDP), create more jobs at the local level, improve standards of living, reduce business costs, generate tax revenue, etc. So if done right with the help of information technology (IT) infrastructural development can be the key to bringing about sustainable economic growth.
One topic that many people debate about is information and communication technology infrastructure development (ICTID). ICTID has become an important topic of discussion within academic circles because it has significant potential to positively transform the lives of billions of individuals around the world both economically and socially. However, some critics argue against developing ICT technologies because they believe it will lead to larger social problems which are difficult to solve. A paper by Gupta et al. shows how mobile phone penetration significantly increases economic growth within developing countries. The study compared mobile phone subscriptions with income per capita at purchasing power parity (PPP), which is a measure of personal income. His study found that for each 10% increase in mobile phone penetration, per capita GDP increased by 1.12% within developing countries. Gupta’s findings are important because they counter the argument that ICTID cannot promote economic growth within developing countries like India. Although his study does not prove causation between mobile phone penetration and increased per capita GDP, it shows that there is an unmistakable positive correlation between the two variables; thus providing evidence that investing in ICT infrastructure can improve individual quality of life economically.