infrastructure contributes to the developement of economy of the country?
Infrastructure acts as a support system for production activity in the economy and, thereby, contributes to economic development. The following points will further explain the role of infrastructure in the economic development of a country:
i. Infrastructure Increases Productivity: Infrastructure-social and economic facilitates production. The availability of quality infrastructure guarantees increase in production and productivity. Infrastructure ensures easy movement of goods and raw materials,thereby, reducing inefficiencies and lead to efficient utilisation of scarce resources and eliminate wastages.
ii. Infrastructure Encourages Investment: Infrastructure provides an environment conducive to investment. Lack of facilities discourage investment. For example, an investor will not invest in absence of basic infrastructure such as transport and communication.
iii. Infrastructure Generates Linkages in Production: Infrastructure promotes economic development by way of various linkages– forward and backward linkages. In other words, infrastructure provides scope for expansion of one industry due to the expansion of the other by way of forward and backward linkages. The process of economic growth becomes a dynamic process in the presence of sufficient infrastructure facilities. This can be explained with the help of a forward linkage. For example, if irrigation facilities boost agricultural production, then the related industries that depend on agriculture for the supply of raw materials simultaneously experience increased production.
iv. Infrastructure Enhances Size of the Market: Infrastructure widens the size of the market. The fast and cost-effective movement of raw materials and finished goods in bulk enables a producer to offer his products across the country and even across international boundaries.