infrastructure and development.pptx

7/25/2019 infrastructure and development.pptx

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Infrastructure and

Development


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What does infrastructure mean?

It is quite hard to nd the precise denition of

infrastructure as most of the economists relate theterm with the services it provides. Hirschman(1958) denes infrastructure as capital thatprovides pulic services. !ccordin" to himinfrastructure often termed as social overheadcapital is considered to include#

.those services without which primary,secondary and tertiary production activities cannotfunction. In its wider sense it includes all public

services from law and order through education andpublic health to transportation, communication,power and water supply as well as such agriculturaloverhead capital as irrigation and drainage

systems.(Hirschman, 195, p. !"


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!ccordin" to $ourie (%&&') most of theeconomists and uran planners descrie

two tpes of infrastructure that aredescried elow#

1. *conomic infrastructure includes those

services that oost economic "rowththrou"h a wide ran"e of di+erentinfrastructure facilities such as roadshi"hwas railroads airports and seaports

provide transportation services, internet-ed telephone suscriptions and moiletelephone suscriptions providetelecommunication services, power plants

transmission and distriution lines that


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%. ocial infrastructure corresponds to thoseactivities which raise the well/ein" of people.

It includes those facilities that promote healtheducation and cultural standards of masses.ocial infrastructure includes institutions suchas schools liraries universities clinicshospitals courts museums pla"rounds etc.

Explaining Physical Infrastructure

$ourie (%&&') ar"ues that infrastructureconsists of two elements/ capitalness and

pulicness. 0hus a common characteristic ofinfrastructure is that it is stron"l used pulic. 0he author e-plains followin" featuresof phsical infrastructure#


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Infrastructure as capital goods# Infrastructure "oodsare related to capital "oods ecause of two sharedcharacteristics. ne is that infrastructure pro2ects

have hi"h initial -ed costs with maintenance andup"radin" costs over time. econdl most ofinfrastructure are ul3 nature e.". powerplants roads hi"hwas railroads etc.

Infrastructure as public goods# 4ure pulic "oodshave two critical properties/ the are non/rival andnon/e-cludale. Infrastructure "oods areconsidered to e mi-ed "oods such as a

telephone line or electricit connection could econsidered non/ rival ut e-cludale. n the otherhand a non/toll con"ested road could e non/e-cludale ut rival.


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Infrastructure with e$ternalities#0here are man caseswhere actions of one individual or rm a+ect otherindividual or rms. 4hsical infrastructure usuallcarries positive e-ternalities. $or e-ample a hi"hspeed railroad etween two cities not onl enetdail passen"ers ut will also carries some positivee-ternalities such as decline in road con"estion,

fewer road accidents, increase in usiness caterin"to rail travel. !n electricit connection to a ruralvilla"e will not onl provide a new source of ener"ut will also lessen the ris3 of re and pollution toenvironment. n the other hand phsical

infrastructure can also produce ne"ative e-ternalitiese.". fauna and ora iodiversit mi"ht e destroed constructin" a dam in some protected area.


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Impact of physical Infrastructure oneconomic growth and development

0he services provided infrastructureinvestments lead to "rowth and etterstandards of livin" in the followin" was#

Infrastructure services such as transport water

and ener" are intermediate inputs forproduction and an reduction in these inputcosts enhances the protailit of productionthus permittin" hi"her levels of output. $or

e-ample cheaper electricit can reduce theinput cost to manufacturin" rms. In the samewa water infrastructure improvements canreduce the cost of irri"ation.


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Infrastructure services raise the productivitof other input factors for e-ample

permittin" the transition from manual toelectrical machine reducin" wor3er6scommutin" time and improvin" informationows throu"h electronic data e-chan"e.

Infrastructure developments such asimproved transport reduce wor3er6s timespent on non/productive activities, raise theeconomic returns to laor. !n e7cient

metropolitan railwa connectin" residentialwith commercial areas would increasewor3ers productive time hence e7cienc.


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Infrastructure also provides emplomentopportunities especiall in the mar3et of uns3illed

and semi/s3illed wor3ers. hen constructin" ahi"hwa or uildin" a lar"e dam 2os in theconstruction industr would e created oostin""rowth in the sector. $urthermore these lar"estructures also require maintenance which further

oosts the lon" term creation of 2os.

etter phsical infrastructure facilities alsocontriute positivel in at least four other areas#trade competitiveness re"ional inte"ration and

tourism. !ccordin" to orld an3 (199:)# %Inade&uate and unreliable infrastructure cripples

the ability of countries to engage in internationaltrade.'(orld an3 199:# 1;)


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$or e-ample a ritish telecommunication services companchar"es erland to


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Infrastructure raises the qualit of life creatin"amenities in phsical environment such as cleanerwater land and air. 0he consumption ofinfrastructure services households contriutesto economic welfare ecause man of theseservices particularl clean water and sanitationfacilities are essential for health and create

environment amenities, others (recreationaltransport and residential telecommunication) arevalued items of consumption. 0hese services alsoprovide access to 2os education and opportunities

for consumption of other "oods. 0hus reduction incosts and improvements in infrastructure facilitiesto households can have the enecial e+ects ofincreasin" their income and consumption raisin"the productivit of their laor.


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esides increasin" the e7cienc of productiveand non/productive activities infrastructureinvestments ma also increase equit. ! decreasein inequalit in livin" standards can e done investin" in certain tpes of infrastructure or incertain re"ions. !ccordin" to orld an3(199:#%&) the poor are dened in terms of their

access to infrastructure services such as access toclean water sanitation education and healthfacilities. !n improvement in these infrastructurefacilities would lead to less povert and a more

equitale societ. $or e-ample a rural roadconstruction not onl enhances "rowth ut it alsoincreases access to schools improvin" the humancapital in the re"ion.


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@ural ed

. $amil ownership of enterprises

. pett retail trade and services

. laor/intensive methods

. free entr

. unre"ulated and competitive mar3ets


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3ills acquired outside the formal schoolsstem

mall scale operation @eliance on indi"enous resources

$ormal ector Bharacteristics

Di7cult entr $requent reliance on overseas resources

Borporate ownership

?ar"e scale of operation

Bapital intensive and often importedtechnolo"

$ormall acquired s3ills


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4rotected mar3ets ( throu"h tari+quota and trade licenses

@e"ulated "overnment

Urban ias

0he notion that most "overnments in

developin" countries favor the uransector in their development policiesthere creatin" a widenin" "ap

etween the rural and uraneconomies.


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omen in informal sector

In some re"ions of the world womenpredominate amon" rural uran mi"rants

Aan of these women simpl accompan

their spouses ! "rowin" numer of women in ?atin

!merica !sia and !frica mi"rate to see3economic opportunit

Aostl men "ot 2o in formal sector andwomen often represent the ul3 of informalsector


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or3 for low wa"es and unstale2os with no emploee or social

securit enets Increase in numer of sin"le female/

contriuted to risin" proportion of

uran households headed women $emale headed households

1. ?ow productivit

%. Informal sector emploment

C. Hi"her dependenc urden

:. Aalnourished


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5. ?ess li3el to otain formal educationhealth care clean water and sanitation

'. *-cluded from "overnment services;. Drop out rate amon" children from female

headed household is hi"her

Aan women run small microenterprises

that require no or little start up capital/mar3etin" of homemade foodstu+ andhandicrafts

tudies in ?atin !merica and !sia/wherecredit is availale to women with informalsector microenterprises/repament rateshave equaled or e-ceeded those from men


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omen are ale to ma3e moreproductive use of capital/rate of

return on investment often surpassthose for men

ut credit facilities are limited for

women/ineli"ile for small loans overnment policies focus more on

formal sector

0o solve the pli"ht of poor uranwomen/ e+orts are required tointe"rate women into economic

mainstream


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0he le"ali>ation and economicpromotion of informal sector where

ma2orit of uran female laor forceis emploed could "reatl improvewomen nancial e-iilit and

productivit of their ventures. 4rovision of a+ordale child care and

famil plannin" services would

li"hten the urden of women6sreproductive roles and permit them"reater economic participation.


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Inclusive "rowth

eynes once said that if there are )veeconomists, they will come*up with si$de)nitions of economics.

orld an3 denes inclusive "rowthas follows#

Einclusive "rowth refers oth to the

pace and pattern of "rowth which areinterlin3ed and must e processedto"etherF


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0hus in roader sense inclusive "rowthmeans the inclusion of all sections of societ

in the process of economic development andsharin" of its enets. Its not onl anoutcome ut a process or mean itself.

0he idea of inclusive "rowth is not as simple

as of "rowth. In economics "rowth is theoutward shift in 44$. hile the wordinclusive "enerall means includin" much oreverthin". 0hus Inclusive rowth is the

"rowth process that provides opportunitiesto all se"ments of the societ to enetfrom economic e-pansion.


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How to achieve Inclusive rowthGrowth accelerators

trate"ies for "rowth

*qualit accelerators

hich ma3e the "rowth more

equitale!nd thus more inclusive


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Aeasurin" Inclusive rowth

Aost studies measures whether a "rowth

process is inclusive anal>in" income"rowth amon" the whole population.

Inclusive "rowth is aout ensurin" equalitof opportunities

Increase in income is a necessar conditionof inclusive "rowth ut not a su7cient one#while income of poor mi"ht increase with"rowth equalit of opportunit mi"ht not.

0he essential condition for "rowth to einclusive is to ensure that there are equalitof opportunities amon" the populations.


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In developin" countries li3e 4a3istan it is air thateconomic opportunities created "rowth process areavailale to all people in the societ particularl to the

poor. Dr. . @. smani in his paper E0he Demands ofInclusive rowth# ?essons from outh !siaF e-plainedthe relevance of inequalit and povert with inclusive"rowth. !ccordin" to him in 4a3istan the "rowthprocess seems to have een inclusive enou"h to "ivemost "roups of people adequate opportunities for"ainin" from "rowth. ut within each "roup onl someindividuals have "raed those opportunities whileothers have not. !nd the result is with/in "roup disparit

and reduced povert. ince the "rowth process in outh!sia has sstematicall drove povert and inequalit inopposite direction. ecause in ever "roup some

individuals failed to lin3/up with the "rowth processthere worsenin" inequalit and melioratin" povert.


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ow the point to ponder here is that whpeople especiall poor people don6t have

access to economic opportunitiesG 0heanswer is that poor people are constrained circumstances .It is the common personwho ear the runt of politici>ed policies or

poor implementation of policies. ecausethe "ains from economic pro"ress are ein"shared unevenl and lar"e se"ments ofpeople are ein" denied the access to such

asic pulic services as the provision ofsecurit of life emploment educationhousin" and health.


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0he solution lies in polic intervention that"overnment should formulate policies and

pro"rams that facilitate the full involvementof poor people in the economicopportunities. It will lift the curtain ofuncertaint that has clouded the economic

environment and hindered to promoteinclusive "rowth.

0herefore Inclusive rowth is the "rowththat not onl creates new economic

opportunities ut also one that assureaccess to the opportunities created for allse"ments of societ particularl the poor.

Documents

infrastructure and development.pptx