Infrastructure Projects & Economic Growth

Infrastructure development is very critical component to encourage a country's economic growth. Developing infrastructure enhances a country's productivity, by making firms more competitive and boosting a region's economy.

'Infrastructure' is actually a very diverse term which can be classified in to

1. Social Infrastructure &

• Universities
• Hospitals
• Community Housing etc.,

1. Economic Infrastructure

• Road and Highways
• Railway
• Airports / Ports etc.,

Basically, It refers to all the ‘structures' used by industry and community for enhancing its productivity

In addition to achieving certain social objectives, social infrastructure indirectly help various economic activities in the Society where as economic infrastructure directly benefits the process of production and distribution of an economy.

Infrastructure may affect aggregate output

1. Directly as an additional input in the production process of other sectors or
2. Indirectly by raising total factor productivity through reduction of transaction and other costs.

The accessibility and quality of infrastructure in a region help shape domestic firms' investment decisions and determines the region's attractiveness to foreign investors. The more stable infrastructure we have, the more investors we attract.

In addition to machinery and technology, human capital also plays an important role in economic development; the quality of a country’s human capital is highly dependent on the infrastructure network supporting the necessities of life. In India, the treatment of waterborne diseases resulting from inadequate access to water infrastructure is estimated to cost the government $15 billion–$20 billion, nearly 2 percent of the country's GDP.

When a Government puts up a power plant, It not only generates employment directly through construction and operations at the power plant, but also creates an industrial base around the plant who would want to tap the power. These industries would get more entrepreneurs and employ more labor. These workers would purchase more goods from the markets thereby creating a positive economic growth cycle.

When a Government puts up a road through an economically backward area, it brings them close to employment options, markets and better healthcare. Infrastructure is one of the keys to wipe poverty. Adequate transportation networks in developing countries could give the poor better access to schools, hospitals, and centers of commerce, which in turn would improve the education, health, and entrepreneurial opportunities that strengthen a country's economic potential.