Why A Good Infrastructure Is So Important For Economy

Written by: Lori Gracing

If a country wants its economy to grow faster, get better for everyone, and get rid of poverty completely so that no one is suffering from poverty, the only way to get there is by creating a strong infrastructure. You need an infrastructure where all types of industries are able to work together to create an economy that is sustainable and profitable for everyone in the country.

What a good infrastructure needs to succeed
The most important components that a successful infrastructure needs are a sustainable source of power and a powerful, economically- friendly source from which to produce it. A good example of such a source of power would be coal or oil.  You then need a solid mode of transportation or two like established roads and highways as well as railways to transport people and goods around. It needs a reliable source of communication so that people can be in touch with each other in a matter of seconds. Ports and airports are vital to have so that imports and exports can come in and leave the country easily, quickly, and as cheaply as possible. In order for an infrastructure to be solid within the country itself and not reliant on another country, it does need a strong agricultural and irrigation program.

Important features that infrastructure relies on
A strong infrastructure is going to come with some important features that define it. First and foremost you have to be ready to put up a very large investment to build up your infrastructure so that it can have good input and output. After a long period of time passes you will finally get through the gestation period. The second important feature is the fact that the most significant economies that are scalable are found in the infrastructure because it has such a large overhead capital and large investment in the beginning. These significant economies which makes up the services within the infrastructures give off the characteristics of natural money being made. Next, the third important feature of a strong infrastructure is the fact that it is able to create its own externalities. So, for example, you want things that make up the infrastructure to help each other out. So when you build roads in rural places, it helps grow the agricultural industry as farmers are able to sell more of their products in places they would not be able to get too otherwise. All three of these infrastructure features means that if you already have a market system that is competitive, you will not be able to get an optimal infrastructure in more cases than not. In other words, you have to find a market failure to find an economically scalable infrastructure that is as socially optimal as possible. This means that an infrastructural facility is going to be either built up or completely run by the government as it will be them who can make the proper investments that it will take to set it up and run them, and then regulate them afterward. The government will have to regulate the public infrastructures that are set up so that they are not used in a corrupt way that takes advantage of and exploits consumers. Electricity, for example, is an infrastructure that needs to be regulated so that the distribution of the electricity is fair and the rates at which it is distributed to consumers never gets too high and takes advantage of the consumer. It is vital that all infrastructure services are regulated by the government so that they stay fair and do not exploit the consumers in any way.

Why Infrastructural services are so important to a successful economy
This was already stated at the beginning of the article but is such an important concept that it bears repeating again; a good infrastructure is vitally important for an economy to be able to grow stronger and much faster and to also ensure that the economy experiences inclusive growth. Inclusive economic growth means that a very large majority of people in the country benefit from the growth In other words, inclusive growth that happens due to a strong infrastructure means that overall poverty is alleviated and there is much less income inequality throughout the country as a whole. When infrastructural facilities like irrigation, rural electrification, better road systems, and road transportation start to expand more, it means that agricultural industries have a better chance of growing larger and agro-processing industries are able to be set up and be sustained. These agricultural infrastructure services that are able to start expanding means that farmers and processing industries owners are able to get their products to markets in larger towns and cities which in turn allow them to sell more products and build up their own infrastructure.

What happens when infrastructure does not start to grow
If your country does not have a strong infrastructure, then the economy will be unable to develop properly which will cause more costs to build up over time, and the effort and money of working people go to waste. An adequate infrastructure is so important because, without it, transportation, energy, and communication are unable to grow and work properly. Unless the government takes the time to invest in an infrastructure properly so that it can improve, it will continue to hinder any economic growth and not allow poverty to be reduced. In short, it is nearly impossible to create a well balanced, developing economy without an infrastructure that supports its growth and sustains it over a long period of time.

What happens when there is a good infrastructure in place
When a high-quality infrastructure is put in place, the economy rises in productivity and enterprises start to get much less expensive. Good infrastructure helps trade services to expand and it helps firms be able to diversify the raw materials that they are able to supply. With a strong infrastructure, a country can produce more goods that meet the demands of people.


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