The expansion in infrastructure facilities such as irrigation, rural electrification, roads and road transport will promote agricultural growth and setting up of agro-processing industries. The expansion of telecommunications in India has been led by private sector whose market share (in terms of number of connections) increased from 73.5 per cent in 2008 to 86.3 per cent in 2012. Rosenstein-Rodan (1943), Nurkse (1952), and Hirschman (1957)argue for a positive role, viewing substantial infrastructure investment as necessary before other types of … Issues requiring attention include the policy for better spectrum management, strengthening a national fibre-optic network, network mobile number possibility and rural telephony. Email: gunawan_p@ub.ac.id. In other words, it is the challenge to ensure strong, sustainable and balanced development through integration of the economy with environmentally sustainable development of infrastructure. It is worthwhile to mention some distinctive features of infrastructure – First, the building of infrastructure requires large and lumpy investment and they contribute to output, after a long time that is their gestation period is quite long. In fact, the data in the table shows that there is a very high degree of positive correlation between per capita energy use and per capita income of a country. Besides, the banks are providing through E-mail the information regarding investment avenues open to them. Infrastructure plays a key role in facilitating trade, especially since recent trade liberalization in Asia has resulted in significant tariff reductions. The adequate infrastructure in the form of road and railway transport system, ports, power, airports and their efficient working is also needed for integration of the Indian economy with other economies of the world. P�_C��e1��Y�Xđs0����m�&�.l��'1�m�4@��ܠs�ֱ�&(�N`]{��� �s������7��� Likewise, in India, the performance of railways port and airport services has been quite inefficient and poor and need drastic reforms to be undertaken to improve their services. x��=is�F��]���O[��a.��*�a�y��X�n�s��`���H�L�q�߿�H Furthermore, the construction of roads and upgradation of national highways (NHs) in the districts affected by Left-Wing extremism in Andhra Pradesh, Bihar, Chhattisgarh, Jharkhand, Madhya Pradesh, Odisha and Uttar Pradesh have been taken up for inclusive growth of these areas. Introduction to Infrastructure 2. That is, the greater the energy used per capita of a country, the higher the per capita income and productivity levels of a country. endobj 4 0 obj These general infrastructure facilities will help farmers and owners of processing industries to get their requirements of raw materials, fertilizers and other inputs at cheap rate and also help them to bring their products to the markets which are located in big towns and cities. They work through mobiles and internet network. This chapter describes the development of infrastructure and their contribution towards economic growth and development. TOS4. The study examines the role of infrastructure development in national economic growth. The availability of good quality infrastructure raises productivity levels in the economy and brings down costs of the enterprises. Out of 35 metro airports work has been completed in 33 metros and in the remaining two airports of Vadodra and Khajuraho work is in progress. Besides, recently in July 2015, Prime minister has launched Digital India scheme to promote the role of telecom. Effective and efficient transportation provide economic benefits that result in multiplier effects such as better accessibility to markets, employment and additional investments. Therefore, these infrastructural facilities are either built or run by the government and public sector enterprises or if private sector is permitted to make investment in them and run them, they need to be regulated by the government, so that they should not exploit the consumers. In contrast, traffic at non-major ports increased at around 9.6 per cent during 2013-14 as compared to 9.8 per cent in 2012-13. The rise in labour productivity ultimately requires greater use of electric power which is obtained from primary sources such as coal, oil and gas. It covers those supporting services that help the growth of directly productive activities like agriculture and industry. Moreover, economic growth can be stimulated by making an investment in the major determinants of economic growth i.e. A model was specified for the purpose and secondary quarterly data was collected for the period 2000-2010. Besides, transport development helps to open up more regions and resources for production. Telecommunications occupy an important place in the modern economy. Transport infrastructure and economic growth are intertwined. A total length of around 22,000 km has been completed till March 2014. The availability of transport expands the market for agricultural and industrial products and thereby enables the producers to produce on a large scale and reap the benefits of the economies of scale. <>>> Besides, for achieving rapid economic growth on sustainable basis, there is need for rise in productivity. Recent literature debate on the linkage between infrastructure and economic growth was sparkled by empirical studies on the role of infrastructure in the United States. For example, you cannot import power facility, roads, ports or railways as they have to be built up in the domestic economy. A distinguishing feature of infrastructure is that while the demand-supply gap in case of other factors can be met by importing some of them, the deficiency of infrastructure cannot be made up through imports. Fay and Perotti (1994) find a positive effect of telephones on economic growth Also, Sanchez (1998) finds a positive impact of roadway length and Consumption of energy by the various countries of the world varies significantly. In some circumstances transport investments appear to be a catalyst for economic growth while in others, economic growth puts pressures on existing transport infrastructures and incite additional investments. Content Guidelines 2. Disclaimer Copyright, Share Your Knowledge For agriculture, irrigation constitutes the important infrastructure. Consequently citizens who are deprived of transportation infrastructure miss out on several economic opportunities. The demands of a growing economy such as ours require railways to expand its freight network, increase its ability to carry larger weight per wagon and the efficiency of the rail system for faster delivery. In India, the percentage of households having electricity connection has increased from 56 in 2001 to 67 in 2011. Whether in the public sector or regulated private sector the performance of infrastructural services has been quite poor. This can mainly be attributed to an increase of 1.8 per cent in the cargo handled at major ports. Secondly, the dissertation develops a generic SCGE model incorporating location decisions of households and firms, housing market, different market imperfections and explicit representation of real transport network. Examples are Korea and Japan. Welcome to EconomicsDiscussion.net! Without efficient ports it is not possible to expand foreign trade. Thus the inclusive growth will lead to the alleviation of poverty and reduction in income inequality in the country. Thus the case for reforming the infrastructural sectors is very strong, both for improving their own performance and for removing the drag of an unreformed and poorly performing infrastructure sector on the realisation of potential benefits of reforms in other sectors. However, due to arbitrariness and irregularities in the allocation of 2G Spectrum in 2008, 2G licenses and associated spectrum were cancelled by the Supreme Court in 2011 and ordered for reallocation of the spectrum through auction. Emphasizing the importance of adequate infrastructure, authors of Economic Survey of India for the Year 2013 -14 quite rightly write, “Rural economic growth in recent years has put enormous pressure on existing infrastructure particularly on transport, energy and communication. Business firms and even farmers can sign up for a telecom service which provides information through SMS or E-mail about market prices and other prevailing market conditions. 2 0 obj In case of India, according to the Twelfth Plan projections, total energy production will reach around 670 million tonnes of oil equivalent (MTOE) by 2016-17 and 844 MTOE by 2021-22. <>/ExtGState<>/XObject<>/ProcSet[/PDF/Text/ImageB/ImageC/ImageI] >>/Annots[ 17 0 R 18 0 R 19 0 R 20 0 R] /MediaBox[ 0 0 595.32 841.92] /Contents 4 0 R/Group<>/Tabs/S/StructParents 0>> As regards minor ports which come under State governments, there has been good progress in the Eleventh Plan period. Infrastructure is the backbone of the U.S. economy and a necessary input to every economy’s growth. Importance 4. No wonder that the per capita income of the USA was 45,640 PPP $ as compared to India’s 3,280 PPP $, that is, about 15 times higher than that of India. These services include a wide range starting from the provision of health services and education facilities to the supply of … The results showed that infrastructure development plays a key role to sustain to accelerate the process of economic growth and sustain it in the long-run. Features of Infrastructure 3. Uncertainties about fuel availability would seriously dampen investment activity in this sector, especially since about half of the generating capacity is expected to come from the private sector and they will not be able to obtain the required finance if fuel supply issues are not resolved. Consequently, following the line of reasoning of the neoclassical growth theory, investment in infrastructure should promote economic growth eventually (Barro & Sala-i-Martin, 1992; Romer, 1994). Because location-based the need for relevant infrastructure facility can be met through development of its capacity in the domestic economy. Before publishing your Articles on this site, please read the following pages: 1. ROLE OF ECONOMIC INFRASTRUCTURE Economic infrastructure has played a very significantly positive role in the growth performance of countries in recent times. 1. Second, due to large overhead capital and lumpy investment, the significant economies of scale are found in most of them. Maintaining, expanding, and modernizing our infrastructure is vital to ensuring strong economic growth. There is no doubt that providing support for infrastructure in an environment such as Solomon Islands, as elsewhere is challenging, and evidence shows that investors in infrastructure are very sensitive to country risk. Name: THE ROLE OF INFRASTRUCTURE DEVELOPMENT ON NATIONAL ECONOMIC GROWTH: A CASE STUDY OF THE TELECOMMUNICATION SECTOR IN NIGERIA (2000-1-2010-4) Type: PDF and MS Word (DOC) Size: [651 KB] Length: [50] Pages . It is critical to every nation’s prosperity and households’ social and economic welfare (American Society of Civil Engineers report, 2017). Roads, water systems, mass transportation, airports and utilities are all examples of infrastructure. Ports are another important infrastructure for international trade connectivity. In many developing countries, the majority of the population, does not have access to the electricity and until recently in telephone services. Similarly, in telecommunication, which is another infrastructural service, various companies such as Airtel, Vodaphone, Idea, MTNL are providing this service of wireless telephony (i.e., mobile service) are being regulated by TRAI. Road transport is another important infrastructure which is essential for movement of goods, raw materials and fuel. It is only since 2001 that the work of building rural roads, highways, good ports and airports has been started in the 10th, 11th and 12th Five Year Plan. A good start had been made in the development of roads in North East in the Eleventh Five Year Plan and is proposed to be pursued with greater vigour in the 12th Plan in which enhanced connectivity of North East has been given a high priority. Besides, it should pay attention to modernisation of its rolling stock and maintenance practices to bring about overall improvement in the quality of its services. Besides, this will also help to prevent the mass exodus of the rural people to urban areas where they cause problems of urban congestion, growth of slums and acute housing shortage. To conclude, Prof. T.N. It will be seen from the table that per capita energy use in 2009 in USA was 7503 kilograms of oil equivalent while in India it was only 545, that is, energy use per capita in the USA is 15 times higher as compared to India. It is therefore urgently needed that infrastructure projects be given environment clearance quickly and investment in them be speeded up if the Indian economy is to be brought back on the fast growth trajectory. Without the efficient telecommunication system, the business through E-commerce and BPO is not possible. Economic infrastructure is the nerve centre of the economic system. has been undertaken by Airports Authority of India (AAI). Communication, especially telecommunication; 6. There had been a significant progress of airport development in the Eleventh Plan period with the development of four new airports at Bangalore, Hyderabad, Delhi and Mumbai under public-private participation (PPP) mode. Been completed till March 2014 during a recession, infrastructure plays a critical role in the country that the... 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