Infrastructure Definition Economics

Infrastructure Definition in Economics: In everyday life, we use various kinds of services and structures; for example, power, communication, transport, hospital, banking, schools, bridges, dams, etc. It seems impossible to imagine a life without these. Such services and structures form an integral part of one’s daily life. In economics, such services and structures are collectively termed “infrastructure”.

Meaning of Infrastructure

Infrastructure Definition in Economics With Example

Every activity in a country, be it production, distribution, etc., requires the presence of infrastructure. The availability of infrastructure ensures the smooth and prosperous functioning of the economy. In other words, it acts as a core support system that enables the economy to grow and develop. To live in the absence of infrastructure is akin to living in a primitive age.

Infrastructure enables the economy to break the shackles of traditional and primitive social structures and customs. In fact, the difference between a developed country and an underdeveloped country can be mainly attributed to the lack of sufficient and technically advanced infrastructure in the latter. Formally, infrastructure is defined as the underlying tangible and organizational structures essential for the smooth and prosperous functioning of an economy.

Infrastructure has two-fold benefits. On the one hand, it serves as the basic input for various economic activities such as production and investment. On the other hand, it acts as a support system.

As an input, infrastructure facilitates the production process. The presence of sound infrastructure is essential for smooth and efficient production in all the sectors of an economy. It is a necessary condition for higher production and higher productivity.

For example, if agriculture is devoid of infrastructure such as irrigation facilities, then it would depend entirely on rains, which may hamper its production and productivity. Similarly, in the absence of proper means of transportation, industrial production would be adversely affected due to delays in the movement of raw materials, capital goods, and finished goods.

Besides serving as an input, infrastructure also acts as a support system. It helps develop the quality of human capital. For example, quality educational institutes and good health-care facilities enhance the productivity of a population and, thereby, help in increasing the production of goods and services.

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