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The relationship between infrastructure and economic development lies in the service that infrastructure contributes to the growth of the economy. That is to say that adequate infrastructure serves as bedrock to facilitate speedy economic development. Countries without adequate infrastructure may find that economic development does not occur at the same pace and level as in countries with a solid infrastructural network.
Infrastructure may be either hard or soft. Examples of hard infrastructure include pieces like airports, paved roads, shipping harbors, canals, well-constructed sewers and power plants. Examples of soft infrastructure include facets like a structured criminal justice system, telephone networks, Internet and a well-developed educational system. It is easy to see the link between infrastructure and economic development just by analyzing each of the components of infrastructural framework.
An example of such a link between infrastructure and economic development can be seen in the importance of a solid transportation system to any meaningful economic development. People need to move around in pursuit of various daily concerns. Parts of these concerns include work-related matters and business opportunities. In countries with good transportation systems, it is easy to move raw materials from the source to the production plants. It is also easy to move the finished products from the various production plants to the warehouses.
Such ease of transportation is in contrast to countries with little to no transportation framework. In most rural communities in some third world countries, it is difficult to transport harvested agricultural products from the farms to the consumers in the cities and other destinations. This is largely due to the fact that the roads and transportation systems are often very poor. Most of the perishable items might be lost before they ever reach their destinations due to the inordinate amount of time it takes to move them over unpaved roads from the farms to the consumers. Such waste is part of the effect of poor infrastructure, which is reflected in the slow growth of the economy.
Apart from roads, countries lacking other basic infrastructures like extensive telephone network coverage and Internet services may find themselves lagging behind in the globalization process. For instance, if the Internet connection is very sparse and weak at best, the citizens may not have a well-developed information technology (IT) system. Such a lack would put the country in jeopardy of failing to take advantage of the opportunities inherent in IT, which would help to advance the development of its economy.
@Logicfest -- but there is a downside to being too eager when it comes to planning ahead. Take your shipping company example. While building that before it was needed would have benefited that city,
But what if the road was built in hopes of attracting a company that never showed up? In that case, you run the risk of having a four lane highway that has so little traffic that people are walking their dogs down it. The point here is that planning can be good if it is done along with a realistic feasibility study.
Here are a couple of real world examples of how areas can be impacted by infrastructure. There was a town in my county that would have had a major shipping company move in but failed to close the deal because the road leading to the local airport was only two-lanes wide (the company insisted on four). Once an area learns about what infrastructure is needed, it is often too late to do anything about.
Another town in my state did plan ahead and put in an industrial park featuring cheap access to electricity and water. The result? That town built a major food processing industry which has provided some great paying jobs and has allowed the town to grow.
So, planning ahead is good. Waiting around to see what is needed is bad.
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