Published on 08th July 2022
Infrastructure is the collection of systems and facilities that serve as the basis for the economic growth of a country. It includes the services and facilities required for economic development, industrialization, improved lifestyles, and flourishing businesses.
Construction of roads, railways, bridges, tunnels, water supply, sewage, electrical grids, and telecommunications (including Internet connectivity and broadband access) are examples of large-scale public and private sector infrastructure projects that boost the economy of a society. Such infrastructure facilities comprise interconnected systems that enable, sustain, or improve society and the environment.
Infrastructure development lays the foundations for other systems, structures, and services to survive, while infrastructure improvements make them thrive in the long run.
Infrastructure comes from two words; infrastructure - below and structure - any supporting installations. Therefore, infrastructure can be defined as the underlying structure or installations that facilitate the functions of other systems.
In other words, infrastructure refers to services and facilities that help uplift economic activities and the growth of a country or region by facilitating better productivity. Therefore, physical infrastructure is crucial for a nation’s economic and social development as it helps improve its people's quality of life.
For instance, the power transmission lines and electrical grid across a city, province, or country can be included in infrastructure projects as the primary intention of such infrastructure is to provide power service to the concerned areas.
Similarly, the roads and railways are infrastructures as they help in the mobility of people and goods while supporting other domains like industries and businesses to flourish. Likewise, traditional IT infrastructure and modern cloud infrastructure help in communication and smooth operation of industries and companies operating within a specific area.
An infrastructure project is a proposed plan to build, maintain, and upkeep infrastructural facilities, systems, and services. Building new roads, constructing new power plants, maintaining sewage systems, and providing drinking water to the public are all examples of infrastructure projects.
The federal government or state governments of a country are responsible for undertaking public infrastructure projects. While the former is responsible for infrastructure projects of national importance like national security, homeland security, and other defense infrastructure assets, state governments focus on infrastructure development at the local level.
On the other hand, local governments are responsible for critical infrastructure projects that support basic facilities, water supply, mass transit, and other traditional infrastructures like roads and bridges.
Based on its role in the economy, infrastructure can be categorized into social or soft infrastructure and economic or hard infrastructure.
This infrastructure provides essential services that boost individual productivity while achieving social goals. The social infrastructure indirectly contributes to the country's economic development.
For example, the education sector does not immediately contribute to a country's economic development. However, it indirectly contributes by providing high-quality education to students, producing an efficient workforce and human resources. Water supply, sanitation, health, and housing are other infrastructure components that help achieve social goals.
This infrastructure directly contributes to the economic prosperity of a country or an organization. This covers essential facilities and services that immediately influence and benefit productivity and distribution.
Power, transportation, irrigation, communication, information technology, data center, and cloud services are examples of hard or economic infrastructure.
Economic infrastructure generates services that directly facilitate a wide range of economic activities. The direct effect is the output or final product of various infrastructure components.
The linkages between economic infrastructure and development are as follows:
Infrastructure can be rightly called the backbone of any economy. Infrastructure improvements are necessary for any nation to prosper in the industrial and agricultural sectors. Even for international and domestic commerce to grow, infrastructure development is necessary.
Here is how a country benefits from various types of infrastructure.
It should be underlined that solid infrastructure is not just necessary for faster economic growth but also inclusive growth. infrastructure development catalyzes the development of the other economic sectors resulting in employment, better health, and education.
Industries can never grow on their own. They need supporting infrastructures such as power facilities, water supply, road networks, railway connectivity, and port connectivity for seamless operations and services. Global companies often prefer operating destinations where the local governments provide them with the supporting infrastructure.
Better infrastructure facilities are one of the key criteria that attract better investment from big corporations and MNCs (Multi-National Companies). infrastructure and investment support high employment prospects, resulting in the country's growth.
Agricultural infrastructure facilities such as irrigation, rural electricity, motorways, and road transport help grow and establish agro-processing businesses. The agricultural boom can further pave the way for other industries like fertilizers, seed processing units, financial services, and insurance services, resulting in more employment and economic activities.
Robust economic infrastructure results in high economic productivity. A country with high productivity witnesses high GDP (Gross Domestic Products) growth. High GDP makes the country more self-reliant in terms of domestic consumption besides helping it to establish international trade.
The following is a breakdown of eight major categories of hard infrastructure, along with related projects and real-world examples:
Aviation has evolved as the most preferred mode of transportation to cover long distances. The contemporary aviation infrastructure project includes pre-existing airport expansions to boost the overall operations and better aviation services.
Examples of aviation infrastructure include:
Technology is constantly evolving, necessitating the need for telecommunications infrastructure initiatives such as transitioning from 4G to 5G mobile networks, bolstering the traditional IT infrastructure, and adopting new-age technology like cloud computing.
Examples of telecommunications infrastructure include:
Bridge infrastructure projects play an important role in connectivity. Both roadways and railways depend heavily upon bridges to pass over rivers, gorges, and rough terrains. Hence, it’s necessary to construct and maintain bridges to maintain and boost the lifelines of an economy.
Examples of bridge infrastructure include:
Energy infrastructure projects are necessary to fulfill domestic, commercial, and industrial needs of energy and power. To fulfill the requirements, a country must invest heavily in developing infrastructure like power plants, coal transportation infrastructure, and gas pipelines.
Power infrastructure further includes the construction, repair, and maintenance of transmission lines and distribution centers for equitable distribution of power throughout the region.
A few examples of power and energy infrastructure are:
Railway infrastructure projects are necessary for both long-distance travel and transportation (railways) and short-distance commutation (subways and metros). Such infrastructure includes rail tracks, railway wagons, train stations, supporting buildings, and equipment like signage.
Examples of railway infrastructures include:
Highways infrastructure projects include drivable locations such as highways, roads, and streets. Roadway projects include both the construction of new roads, bridges, and tunnels, repairing existing roads, and maintaining the roads in drivable condition.
Some examples of roadway infrastructures include:
Water supply and irrigation infrastructure projects are essential for providing drinking water, water for agriculture and industrial use, household use, and saving water. Depending upon environmental factors and geography, types of water infrastructure can vary. Adequate water infrastructure is also necessary to prevent drought-like situations in arid areas.
Examples of water infrastructure include:
Waste management is vital for keeping the environment, places, and people safe and hygienic. Waste management infrastructure includes processing and recycling facilities. These infrastructures are also necessary to achieve sustainable development goals.
Examples of waste management infrastructures:
Investment in an infrastructure construction project depends upon the type of infrastructure or who owns them. While infrastructure spending is a priority for every government, a cash crunch or financial constraint may result in low infrastructure investment.
As a result, private investment in the infrastructure sector becomes a viable option. Alternatively, a public-private partnership model can be devised for capital-intensive infrastructure megaprojects.
President Joe Biden signed a landmark USD 1.2 Trillion Infrastructure Bill to bolster America’s aging infrastructures. The bill also includes a package of USD 550 Billion in new investment for bridges, airports, waterways, public transit, and other infrastructure management.
Extending their 2021 announcement called Build Back Better World, the G7 leaders have together pledged to raise USD 600 Billion in a mix of government and private funds to develop and strengthen global infrastructure.
You can follow this Global Project and Tender Tracker to learn more about such projects and their latest status. The tracker is also helpful to individuals or companies looking for investment or tender opportunities in the energy, infrastructure, construction, oil, and gas sector.
