Infrastructure is the systems and facilities that serve a country for economic growth through transportation, schools and other common areas. It includes the services and facilities required for economic development, 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.

Defining Infrastructure

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.

What is Infrastructure Project

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.

Read: What is an EPC Contract? All About Procurement & EPC contractor

Different Types of Infrastructure

Based on its role in the economy, infrastructure can be categorized into hard and soft infrastructure:

Social Infrastructure/Soft 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.

Hard Infrastructure/Economic infrastructure

The hard infrastructure is the physical infrastructure that 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.

Role of Economic Infrastructure in the Economic Development

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: 

• The physical assets of infrastructure help to lower the cost of production or enhance the level of outputs produced for a given cost.
   
• Infrastructure helps the markets to work better. The infrastructure facilities like transport and communications facilitate better supply chain management which ultimately lowers operational costs and helps business fraternities to fulfill changing market demands.
   
• An efficient public infrastructure allows small and large business entities to save a significant portion of their capital from buying infrastructure services. As a result, their goods and services become more affordable for the general public. This affordability results in enhancing the purchasing power of people of that region. Consequently, economic activities flourish and bring more economic growth to the region.

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How Does Infrastructure Investment Benefit a Country?

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.

Inclusive Growth

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.

Industrial Development

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.

Investment and Employment

Sustainable 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 Prosperity

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.

Flourishing Trade

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.

8 Key Economic Infrastructures for a Thriving Economy

The following is a breakdown of eight major categories of hard infrastructure, along with related projects and real-world examples:

Aviation

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:

• Building and maintaining airports & air traffic control
• Setting up heliports
• Other necessary ground facilities for smooth aviation operations
   

Telecommunications & Information Technology

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:

• Installing telephone & mobile towers
• Laying out telecommunication lines
• Facilitating internet, television, and radio services
• Launch of satellites
• Upgrading mobile networks
   

Bridges

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:

• Traditional arch bridges
• Metal beam bridges
• Modern cable & suspension bridges

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Power, Energy, Oil & Gas

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:

• Gas pipelines
• Power grid networks
• Nuclear plants
• Gas and coal plants
• Hydro-electric power plants
• Solar parks
   

Railways, Subways, and Metro

Railway infrastructure and railroad 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:

• Railway tracks
• Trains
• Train stations
• Tunnels
• Railroad bridges
   

Highways

Highways infrastructure projects include drivable locations such as highways, roads, and streets. Global 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:

• Highways, street roads
• Transit stations
• Bridges and tunnels

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Water Supply and Irrigation

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:

• Supply drinking water
• Irrigation channels
• Water treatment and filtration plants
• Stormwater or rainwater harvesting facilities
• Water reservoir
   

Waste Management

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.

Waste management infrastructure examples include:

• Garbage dump yards
• Garbage treatment plants
• Waste recycling facilities
• Waste transport
• Waste incineration facilities
   

Investment in the Infrastructure Sector

Investment in an infrastructure construction project depends upon the type of infrastructure or who owns it. 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.

Major Infrastructure Construction Projects/Investment Plans Announced Recently

On 29th April 2024, Mohammed bin Rashid approved the designs for the new passenger terminal at AI Maktoum International Airport. It is being built as world's largest airport with AED 128 billion (USD 35 billion). It is being built to position Dubai as the Global Aviation Hub. 

On 19th June 2024, the Indian cabinet approved the construction of Vadhavan Port Project Limited (VPPL), a special purpose vehicle (SPV). It is being developed as an all-weather greenfield deep draft major port in Vadhavan Palghar District, Maharashtra. The government of India is investing around USD 9 billion.

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.

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