Importance of Infrastructure in a Nation’s Development

Why are Some Countries more advanced than the others ?

Why are the Western countries more advanced than many Asian countries? Why even China and South Korea have raced ahead of India and other Asian countries in the recent times? Or for that matter, why is India lagging behind many countries in terms of economic growth and poverty? There are many reasons and answers to these questions and one of them is the fact that all these nations have very good physical infrastructure. Indeed, the fact that they have better roads, ports, highways, airports, and other elements of infrastructure is one of the reasons why they have clocked faster economic growth.

The Importance of Physical Infrastructure

Why is physical infrastructure so important to a nation’s development? The answer is that once goods are produced, they need to be transported to the ports and airports for transportation to other states and countries. This means that excellent roads are needed to transport the goods or otherwise, they would be delayed leading to economic and reputational losses. Indeed, if a manufacturer produces goods quickly but is unable to transport them to the destination as fast as they can, then there is no point in making the goods in an efficient manner in the first place.

Roads, Ports, and Airports

Moreover, good roads are also needed for manufacturers to obtain raw materials and other components. In addition, ports that are well functioning and where ships do not need to wait for longer periods of time or in other words, are not congested are very crucial for economic growth as otherwise, the loading, and unloading of goods from the ships would cause losses to the exporters and importers. Similarly, there is a need to develop airports that are modern and efficient for freer and easier movement of people in and out of the countries. For all these reasons, it is vital that the physical infrastructure needs to be as efficient and as productive as possible.

Other Elements of Infrastructure

There are other elements of infrastructure and they are the power and water situation apart from the development of a city’s infrastructure. Indeed, if there is power outages and blackouts or what are known as “power holidays” or “industry holidays” wherein the manufacturers cease production on certain days, then these timeouts would lead to losses for them. Moreover, if a city is unable to cope with the influx of migrants and absorb the growing numbers of people, then the people working in the plants and factories would be unable to function effectively and work productively.

Need for Massive Investments in Infrastructure as a Route to Faster Economic Growth

No nation develops without investing in infrastructure and indeed, this is the reason why in the aftermath of the Second World War, the Western countries massively invested in infrastructure. It is also the reason why Japan and South Korea and later China undertook a drastic improvement in their infrastructure so as to ensure that it “enables” faster economic growth and development. Indeed, as we would discuss next, it is the enabling aspect which is important since infrastructure is supposed to facilitate and spur economic growth by providing better connectivity and enhancing productivity and efficiency.

The Hardware and Software of Enabling Infrastructure

Moreover, investments in infrastructure work as a force multiplier wherein the monies invested in building highways and ports and airports not only creates the “hardware” for a nation’s development but also results in more growth because the huge amounts of money are spent on construction materials, wages, and production of other raw materials which help those industries to grow faster. Therefore, it is indeed the case that massive investments in infrastructure enable the nation’s economic development by ensuring that the hardware is in place and the software wherein the people needed to staff the plants and factories are also capable and work productively.

Human Capital

Indeed, while many experts talk about physical infrastructure, they forget to talk about another crucial element and that is the software or the skills of the employees and their productivity and productive capacities. This aspect which is developed through investments in healthcare and education enables a healthy and well educated workforce who would then lead to faster economic growth by ensuring that the necessary human resources are there for the industries and the technology companies to take advantage of.

Urban Planning

Another important element in a nation’s infrastructure is the way in which the urban areas are managed and planned. For instance, most Indian cities are groaning under the weight of their residents and the creaking infrastructure results in poor planning and haphazard growth which would derail any chances of faster economic growth. Indeed, if there is anything holding back countries such as India, it is the sheer lack of planning as far as cities and the other components of infrastructure are concerned.

Conclusion: There are no Shortcuts to Success

Which brings us to the final point and that is that there are no substitutes for infrastructure development and there are no shortcuts for faster economic growth. It is only when these aspects are taken care of that nations develop and there are lessons for India and other Asian countries that are trying to grow and leapfrog into the elite club of developed nations. Therefore, unless developing countries invest in all elements of the infrastructure component, their development would be slow and retarded and they would miss the bus again and lose out in the race for economic competitiveness. This is the hard truth and the bitter reality which should hopefully spur them to invest in their infrastructure.



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Managerial Economics