Infrastructure and Economic Development
Introduction
It has long been established that the economic growth and development of nations depend on the infrastructure systems established within the nations. Infrastructure forms a basic concept of the built environment and it comprises of engineering works such as roads, telecommunications, power generation facilities and pipelines. Infrastructure investments can influence the economic growth of a nation in various ways. In this essay, the economic development implications of infrastructure investments will be evaluated.
How infrastructure can help economic development
Economists agree that infrastructure investment can offer various benefits that could facilitate economic development (Galiani & Santolini, 2005). For example, superior infrastructure can reduce transportation costs for individuals as well as businesses. In many existing studies, economists have linked the availability of quality infrastructure with increased efficiency and trade cost reduction (Galiani & Santolini, 2005).
Coping with climate change
The effect of infrastructure investment on economic development can also be seen in terms of climate resilience. Nations can cope with climate change by investing in infrastructure that is resilient and adaptive to climate change. Quality infrastructure such as flood-control barriers, strong water distribution systems and improved transport systems can help countries resist the shock of climate change and reduce the impact of natural disasters on the economy.
Hiring of indigenous labor
Infrastructure investments can also result in job creation and is particularly beneficial for indigenous individuals living in developing countries. For instance, indigenous individuals living in cultures that rely heavily on subsistence farming and hunting may be the major beneficiaries of job creation from the construction of roads, schools and other infrastructure. Infrastructure investments can also improve education and training opportunities for indigenous people, which can lead to economic development.
Improving access to markets
A well-developed infrastructure system can be beneficial for businesses, as it can provide direct access to markets. An efficient infrastructure can reduce transport costs, allowing businesses to operate in different markets and reduce their costs. Improved transport networks can also increase the speed of goods arriving and leaving markets, which can improve the competitiveness of businesses.
Conclusion
In conclusion, infrastructure investment can play an important role in stimulating economic growth and development. Infrastructure facilitates access to markets, improves the efficiency of business operations and helps countries cope with climate change. Infrastructure investments can help create jobs, which are especially beneficial to indigenous people living in developing countries.
References
Galiani, S. & Santolini, R. (2005). “Infrastructure and Economic Development: An Overview”. Economic Development and Cultural Change 53 (4), pp. 883-910.
