After going through this lesson, you will be able to understand the role of infrastructure in the economic development of a country.
Role of Infrastructure in Economic Development
There are some countries that experience fast growth and development; there are some that lag in terms of economic progress, and there are certain others that are still underdeveloped. So, we have rich and developed countries on the one hand, and developing and underdeveloped countries on the other.
The presence of a sound infrastructure is one of the factors that put developed nations far ahead of developing and underdeveloped ones. Infrastructure is the backbone of the process of growth and development of a country. It acts as a core support system that enables the economy to grow and develop.
It helps the economy to overcome the shackles of customs and traditions, and move on the path of development. We can say that the overall development and prosperity of a country are not possible without the development of economic and social infrastructure.
For instance, the production process in a country cannot be smooth and efficient in the absence of proper economic infrastructures such as roads, transport, communication, and banking. Similarly, the productivity of a population cannot be at a high level in the absence of proper social infrastructures such as health and education. A low level of productivity, in turn, adversely affects the production process.
Role of Infrastructure in Economic Development #1
Increases productivity
Infrastructure facilitates the process of production. The availability of quality infrastructure guarantees increases in production and productivity. In the absence of infrastructure, the production process cannot be smooth and efficient. In every sector of the economy, production depends to a great extent on the presence of quality infrastructure.
Infrastructure acts as an input as well as a support system for production. For example, if the industrial sector is lacking in infrastructures such as transportation and communication, then there may be delays in the movement of raw materials and
finished goods from one place to another.
Consequently, the process of production is hampered. The process of distribution is also adversely affected in the absence of sound transportation. A similar situation can be seen in the agricultural sector. If this sector lacks infrastructure such as irrigation facilities, then it may have to depend entirely on rains.
This may hamper its production and productivity. Social infrastructure such as health and education helps accelerate the production process by increasing productivity. A healthy and educated workforce is of great value in the production process. Thus, we can say that infrastructure helps pace the production process and productivity.
Role of Infrastructure in Economic Development #2
Encourages investment
Investment plays an important role in stimulating the growth process of a country. Infrastructure builds an environment conducive to investment. Regions that have sound infrastructure exhibit fast growth and development. This is because the presence of quality infrastructure attracts investors to these regions. The presence of infrastructures such as transport, communication, banking, and power in a region facilitates the establishment of production units and industries in that region.
Infrastructure makes a region’s profit viable by eliminating the bottlenecks in the production process and by improving productivity. Consequently, investors are compelled to invest in such a region. Similarly, a country that has sound infrastructural facilities is able to attract investments from foreign countries. However, a country that lacks such facilities finds it hard to attract foreign investments.
Role of Infrastructure in Economic Development #3
Generates linkages in production
Linkage refers to a situation wherein growth in one production sector propels growth in another sector. The presence of such linkages enhances the development process. Infrastructure promotes economic development by way of two types of linkages: forward linkages and backward linkages. In other words, infrastructure provides the scope for the expansion of one industry due to the expansion of another, by way of forwarding and backward linkages. For example, if irrigation facilities boost agricultural production, then industries that depend on agriculture for the supply of raw materials will simultaneously experience increased production.
Similarly, increased production in the manufacturing sector will boost the distribution and services sectors. Thus, economic growth becomes a dynamic process in the presence of sufficient infrastructural facilities.
Role of Infrastructure in Economic Development #4
Enhances the size of the market
Infrastructure such as transport and communication widens the size of the market. It makes the movement of raw materials and finished goods fast and cost-effective. Goods can be transported in bulk and in less time from one place to another. This enables a producer to offer his products across the country and even across international boundaries.
To conclude, we can say that infrastructure plays a vital role in the economic development of a country. Without sound infrastructure, a country will find it difficult to achieve the heights of growth and development.
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