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”. There are two types of Infrastructure.
- Economic infrastructure
- Social infrastructure
Types of Infrastructure #1
Economic Infrastructure includes the elements of economic change that aid in the process of production and distribution. In other words, it refers to the infrastructure that is essential to the production process. Such infrastructure directly enhances the production process. Energy, transportation, communication, banking, and financial institutions are significant examples of economic infrastructure.
This form of infrastructure improves the quality of economic resources and, thereby, raises the economy’s productivity as a whole. In this way, it serves as a support system for economic growth. The greater the economic infrastructure, the greater will be the production; the greater the production, the greater will be the generation of employment opportunities. Thus, economic growth necessitates the expenditure incurred on economic infrastructure.
Types of Infrastructure #2
This includes all those facilities and institutions that enhance the quality of human capital. Educational institutions, hospitals, nursing homes, housing facilities, etc. are some examples of social infrastructure. Unlike economic infrastructure, it indirectly accelerates the production of goods and services by increasing productivity.
For example, the availability of better health care and medical facilities enables a continual supply of a healthy workforce. This, in turn, is reflected in the form of increased levels of production. Social infrastructure raises human productivity and, thereby, improves the standard of living.
Relationship Between Economic and Social Infrastructure
The two types of infrastructure (economic and social) are interdependent on and complementary to each other. While economic infrastructure fosters economic growth, social infrastructure enhances the standard of living. It is only the combined effect of higher economic growth and higher standard of living which leads to the welfare of an economy as a whole.
In other words, the economic growth attained with the help of economic infrastructure is imperfect without human development, which is attained by means of social infrastructure. Thus, the presence of both forms of infrastructure is necessary for economic prosperity.
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