Impact of Infrastructural Development on the Economy of a Country
- Investment in infrastructure is part of the capital accumulation required for economic development and may have an impact on socioeconomic measures of welfare.
- The causality of infrastructure and economic growth has always been in debate. In developing nations, expansions in electric grids, roadways, and railways show marked growth in economic development. However, the relationship does not remain in advanced nations who witness more and more lower rates of return on such infrastructure investments.
- Nevertheless, infrastructure yields indirect benefits through the supply chain, land values, small business growth, consumer sales, and social benefits of community development and access to opportunity.
- The American Society of Civil Engineers cite the many transformative projects that have shaped the growth of the United States including the Transcontinental Railroad that connected major cities from the Atlantic to Pacific coast.
- The Panama Canal that revolutionized shipment in connected the two oceans in the Western hemisphere and still others that include the Hoover Dam, Trans-Alaskan pipeline, and many bridges (the Golden Gate, Brooklyn, and San Francisco–Oakland Bay Bridge). All these efforts are testimony to the infrastructure and economic development correlation.
- European and Asian development economists have also argued that the existence of modern rail infrastructure is a significant indicator of a country’s economic advancement.
- Civil defense planners and developmental economists generally refer to both hard and soft infrastructure, including public services such as schools and hospitals, emergency services such as police and fire fighting, and basic financial services.
- The notion of Infrastructure-based development combining long-term infrastructure investments by government agencies at central and regional levels with public private partnerships has proven popular among Asian- notably Singaporean and Chinese, Mainland European and Latin American economists.