Infrastructure and economics
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Infrastructure (also known as "
capital goods The economic concept of a capital good (also called complex product systems (CoPS),H. Rush, "Managing innovation in complex product systems (CoPS)," IEE Colloquium on EPSRC Technology Management Initiative (Engineering & Physical Sciences Researc ...
", or "
fixed capital In accounting, fixed capital is any kind of real, physical asset that is used repeatedly in the production of a product. In economics, fixed capital is a type of capital good that as a real, physical asset is used as a means of production which i ...
") is a platform for governance, commerce, and economic growth and is "a lifeline for modern societies".Esmaeili, Behzad, et al. "Inclusion of an Introduction to Infrastructure Course in a Civil and Environmental Engineering Curriculum." Journal of Professional Issues in Engineering Education and Practice (2016): 04016020 It is the hallmark of
economic development In the economics study of the public sector, economic and social development is the process by which the economic well-being and quality of life of a nation, region, local community, or an individual are improved according to targeted goals and o ...
.Goldsmith, H. (2015). Actors and innovations in the evolution of infrastructure services. The Economics of Infrastructure Provisioning, 23-94. It has been characterized as the mechanism that delivers the "..fundamental needs of society: food, water, energy, shelter, governance ... without infrastructure, societies disintegrate and people die."Hart, Steven D., et al. "Infrastructure and the Operational Art:A Handbook for Understanding, Visualizing, and Describing Infrastructure Systems" US Army Engineer Research and Development Center, (2014)
Adam Smith Adam Smith (baptized 1723 – 17 July 1790) was a Scottish economist and philosopher who was a pioneer in the thinking of political economy and key figure during the Scottish Enlightenment. Seen by some as "The Father of Economics"——— ...
argued that
fixed asset A fixed asset, also known as long-lived assets or property, plant and equipment (PP&E), is a term used in accounting for assets and property that may not easily be converted into cash. Fixed assets are different from current assets, such as cas ...
spending was the "third rationale for the state, behind the provision of defense and justice."Tatom, J. A. (1991). Should government spending on capital goods be raised?. Federal Reserve Bank of St. Louis Review, 73(3), 3-15. Tatom was citing Smith (1937), Book V. part 3, especially p. 682. Societies enjoy the use of "...highway, waterway, air, and rail systems that have allowed the unparalleled mobility of people and goods. Water-borne diseases are virtually nonexistent because of water and wastewater treatment, distribution, and collection systems. In addition, telecommunications and power systems have enabled our economic growth."ASCE Critical Infrastructure Guidance Task Committee. "Guiding principles for the nation's critical infrastructure." American Society of Civil Engineers,2009. This development happened over a period of several centuries. It represents a number of successes and failures in the past that were termed
public works Public works are a broad category of infrastructure projects, financed and constructed by the government, for recreational, employment, and health and safety uses in the greater community. They include public buildings ( municipal buildings, sc ...
and even before that
internal improvements Internal improvements is the term used historically in the United States for public works from the end of the American Revolution through much of the 19th century, mainly for the creation of a transportation infrastructure: roads, turnpikes, canal ...
. In the 21st century, this type of development is termed infrastructure. '' Infrastructure can be described as tangible
capital assets A capital asset is defined as property of any kind held by an assessee, whether connected with their business or profession or not connected with their business or profession. It includes all kinds of property, movable or immovable, tangible or int ...
(income-earning assets), whether owned by private companies or the government.Kliesen, K. L., & Smith, D. C. (2009). Digging into the infrastructure debate. The Regional Economies, 4-9. Accessed a

The article emphasized the distinction between capital assets or capital stocks and capital flows. The latter is the annual or quarterly change in the capital stock, otherwise known as fixed investment, which is part of Gross Domestic Product (GDP). This article focused on capital stocks.


Ownership and financing of infrastructure

Infrastructure may be owned and managed by
government A government is the system or group of people governing an organized community, generally a state. In the case of its broad associative definition, government normally consists of legislature, executive, and judiciary. Government is a ...
s or by private companies, such as sole
public utility A public utility company (usually just utility) is an organization that maintains the infrastructure for a public service (often also providing a service using that infrastructure). Public utilities are subject to forms of public control and r ...
or
railway Rail transport (also known as train transport) is a means of transport that transfers passengers and goods on wheeled vehicles running on rails, which are incorporated in tracks. In contrast to road transport, where the vehicles run on a pre ...
companies. Generally, most roads, major ports and airports, water distribution systems and sewage networks are publicly owned, whereas most energy and telecommunications networks are privately owned. Publicly owned infrastructure may be paid for from taxes, tolls, or metered user fees, whereas private infrastructure is generally paid for by metered user fees. Major investment projects are generally financed by the issuance of long-term bonds. Hence,
government A government is the system or group of people governing an organized community, generally a state. In the case of its broad associative definition, government normally consists of legislature, executive, and judiciary. Government is a ...
owned and operated infrastructure may be developed and operated in the
private sector The private sector is the part of the economy, sometimes referred to as the citizen sector, which is owned by private groups, usually as a means of establishment for profit or non profit, rather than being owned by the government. Employment The ...
or in public-private partnerships, in addition to in the
public sector The public sector, also called the state sector, is the part of the economy composed of both public services and public enterprises. Public sectors include the public goods and governmental services such as the military, law enforcement, infra ...
. In the United States, public spending on infrastructure has varied between 2.3% and 3.6% of GDP since 1950. Many financial institutions invest in infrastructure.


Infrastructure debt

Infrastructure debt is a complex investment category reserved for highly sophisticated
institutional investor An institutional investor is an entity which pools money to purchase securities, real property, and other investment assets or originate loans. Institutional investors include commercial banks, central banks, credit unions, government-linked co ...
s who can gauge jurisdiction-specific risk parameters, assess a project’s long-term viability, understand transaction risks, conduct
due diligence Due diligence is the investigation or exercise of care that a reasonable business or person is normally expected to take before entering into an agreement or contract with another party or an act with a certain standard of care. It can be a l ...
, negotiate (multi)
creditor A creditor or lender is a party (e.g., person, organization, company, or government) that has a claim on the services of a second party. It is a person or institution to whom money is owed. The first party, in general, has provided some property ...
s’ agreements, make timely decisions on
consent Consent occurs when one person voluntarily agrees to the proposal or desires of another. It is a term of common speech, with specific definitions as used in such fields as the law, medicine, research, and sexual relationships. Consent as und ...
s and
waiver A waiver is the voluntary relinquishment or surrender of some known right or privilege. Regulatory agencies of state departments or the federal government may issue waivers to exempt companies from certain regulations. For example, a United St ...
s, and analyze loan performance over time. Research conducted by the World Pensions Council (WPC) suggests that most UK and European pensions wishing to gain a degree of exposure to infrastructure debt have done so indirectly, through investments made in infrastructure funds managed by specialised Canadian, US and Australian funds. On November 29, 2011, the British government unveiled an unprecedented plan to encourage large-scale pension investments in new roads, hospitals, airports, etc. across the UK. The plan is aimed at enticing 20 billion pounds ($30.97 billion) of investment in domestic infrastructure projects.


Infrastructure as a new asset class for pension funds and SWFs

Pension and sovereign wealth funds are major direct investors in infrastructure. Most pension funds have long-dated liabilities, with matching long-term investments. These large institutional investors need to protect the long-term value of their investments from inflationary debasement of currency and market fluctuations, and provide recurrent
cash flow A cash flow is a real or virtual movement of money: *a cash flow in its narrow sense is a payment (in a currency), especially from one central bank account to another; the term 'cash flow' is mostly used to describe payments that are expected ...
s to pay for retiree benefits in the short-medium term: from that perspective, think-tanks such as the World Pensions Council (WPC) have argued that infrastructure is an ideal
asset class In finance, an asset class is a group of financial instruments that have similar financial characteristics and behave similarly in the marketplace. We can often break these instruments into those having to do with real assets and those havin ...
that provides tangible advantages such as long duration (facilitating cash flow matching with long-term liabilities), protection against inflation and statistical
diversification Diversification may refer to: Biology and agriculture * Genetic divergence, emergence of subpopulations that have accumulated independent genetic changes * Agricultural diversification involves the re-allocation of some of a farm's resources to ...
(low correlation with ‘traditional’ listed assets such as equity and fixed income investments), thus reducing overall portfolio volatility. Furthermore, in order to facilitate the investment of institutional investors in developing countries' infrastructure markets, it is necessary to design risk-allocation mechanisms more carefully, given the higher risks of developing countries' markets.


Supranational and public co-investment with institutional asset owners

The notion of
supranational Supranational or supra-national may refer to: * Supranational union, a type of multinational political union * Supranational law, a form of international law * Supranational legislature, a form of international legislature * Supranational curre ...
and public co-investment in infrastructure projects jointly with private institutional asset owners has gained traction amongst IMF,
World Bank The World Bank is an international financial institution that provides loans and grants to the governments of low- and middle-income countries for the purpose of pursuing capital projects. The World Bank is the collective name for the Interna ...
and
European Commission The European Commission (EC) is the executive of the European Union (EU). It operates as a cabinet government, with 27 members of the Commission (informally known as "Commissioners") headed by a President. It includes an administrative body o ...
policy makers in recent years notably in the last months of 2014/early 2015: Annual Meetings of the International Monetary Fund and the World Bank Group (October 2014) and adoption of the €315 bn European Commission Investment Plan for Europe (December 2014).


Foreign ownership of 'public assets'

Some experts have warned against the risk of "infrastructure nationalism", insisting that steady investment flows from foreign pension and sovereign funds were key for the long-term success of the asset class- notably in large European jurisdictions such as France and the UK


Comparison of private versus public investment

An interesting comparison between
privatisation Privatization (also privatisation in British English) can mean several different things, most commonly referring to moving something from the public sector into the private sector. It is also sometimes used as a synonym for deregulation when ...
versus government-sponsored
public works Public works are a broad category of infrastructure projects, financed and constructed by the government, for recreational, employment, and health and safety uses in the greater community. They include public buildings ( municipal buildings, sc ...
involves
high-speed rail High-speed rail (HSR) is a type of rail system that runs significantly faster than traditional rail, using an integrated system of specialised rolling stock and dedicated tracks. While there is no single standard that applies worldwide, lines ...
(HSR) projects in
East Asia East Asia is the eastern region of Asia, which is defined in both geographical and ethno-cultural terms. The modern states of East Asia include China, Japan, Mongolia, North Korea, South Korea, and Taiwan. China, North Korea, South Korea and ...
. In 1998, the
Taiwan Taiwan, officially the Republic of China (ROC), is a country in East Asia, at the junction of the East and South China Seas in the northwestern Pacific Ocean, with the People's Republic of China (PRC) to the northwest, Japan to the nort ...
government awarded the Taiwan High Speed Rail Corporation, a private organisation, to construct the 345 km line from
Taipei Taipei (), officially Taipei City, is the capital and a special municipality of the Republic of China (Taiwan). Located in Northern Taiwan, Taipei City is an enclave of the municipality of New Taipei City that sits about southwest of the n ...
to
Kaohsiung Kaohsiung City (Mandarin Chinese: ; Wade–Giles: ''Kao¹-hsiung²;'' Pinyin: ''Gāoxióng'') is a special municipality located in southern Taiwan. It ranges from the coastal urban center to the rural Yushan Range with an area of . Kaohsi ...
in a 35-year concession contract. Conversely, in 2004 the
South Korea South Korea, officially the Republic of Korea (ROK), is a country in East Asia, constituting the southern part of the Korea, Korean Peninsula and sharing a Korean Demilitarized Zone, land border with North Korea. Its western border is formed ...
n government charged the Korean High Speed Rail Construction Authority, a public entity, to construct its high-speed rail line, 412 km from
Seoul Seoul (; ; ), officially known as the Seoul Special City, is the capital and largest metropolis of South Korea.Before 1972, Seoul was the ''de jure'' capital of the Democratic People's Republic of Korea (North Korea) as stated iArticle 103 ...
to
Busan Busan (), officially known as is South Korea's most populous city after Seoul, with a population of over 3.4 million inhabitants. Formerly romanized as Pusan, it is the economic, cultural and educational center of southeastern South Korea, w ...
, in two phases. While different implementation strategies, Taiwan successfully delivered the HSR project in terms of
project management Project management is the process of leading the work of a team to achieve all project goals within the given constraints. This information is usually described in project documentation, created at the beginning of the development process. Th ...
(time, cost, and quality), whereas South Korea successfully delivered its HSR project in terms of product success (meeting owners' and users' needs, particularly in ridership). Additionally, South Korea successfully created a
technology transfer Technology transfer (TT), also called transfer of technology (TOT), is the process of transferring (disseminating) technology from the person or organization that owns or holds it to another person or organization, in an attempt to transform invent ...
of high-speed rail technology from French engineers, essentially creating an industry of HSR manufacturing capable of exporting knowledge, equipment, and parts worldwide.


Planning and management of infrastructure


Infrastructure asset management

The method of ''infrastructure asset management'' is based upon the definition of a Standard of service (SoS) that describes how an asset will perform in objective and measurable terms. The SoS includes the definition of a minimum condition grade, which is established by considering the consequences of a failure of the infrastructure asset. The key components of infrastructure asset management are: *Definition of a standard of service **Establishment of measurable specifications of how the asset should perform **Establishment of a minimum condition grade *Establishment of a
whole-life cost Whole-life cost is the total cost of ownership over the life of an asset. The concept is also known as life-cycle cost (LCC) or lifetime cost, and is commonly referred to as "cradle to grave" or "womb to tomb" costs. Costs considered include the f ...
approach to managing the asset *Elaboration of an ''
Asset Management Plan An asset management plan (AMP) is a tactical plan for managing an organisation's infrastructure and other assets to deliver an agreed standard of service. Typically, an asset management plan will cover more than a single asset, taking a system appro ...
'' After completing asset management, official conclusions are made. The
American Society of Civil Engineers American(s) may refer to: * American, something of, from, or related to the United States of America, commonly known as the "United States" or "America" ** Americans, citizens and nationals of the United States of America ** American ancestry, pe ...
gave the United States a "D+" on its 2017 infrastructure report card.


Engineering

Most infrastructure is designed by
civil engineers This list of civil engineers is a list of notable people who have been trained in or have practiced civil engineering. A B C D E F G H I J K L M N O P Q R S T U ...
or
architects An architect is a person who plans, designs and oversees the construction of buildings. To practice architecture means to provide services in connection with the design of buildings and the space within the site surrounding the buildings that h ...
. Generally road and rail transport networks, as well as water and waste management infrastructure are designed by
civil engineers This list of civil engineers is a list of notable people who have been trained in or have practiced civil engineering. A B C D E F G H I J K L M N O P Q R S T U ...
, electrical power and lighting networks are designed by power engineers and
electrical engineers Electrical engineering is an engineering discipline concerned with the study, design, and application of equipment, devices, and systems which use electricity, electronics, and electromagnetism. It emerged as an identifiable occupation in the ...
, and telecommunications, computing and monitoring networks are designed by systems engineers. In the case of urban infrastructure, the general layout of roads, sidewalks and public places may sometimes be developed at a conceptual level by
urban planners An urban planner (also known as town planner) is a professional who practices in the field of town planning, urban planning or city planning. An urban planner may focus on a specific area of practice and have a title such as city planner, town ...
or
architects An architect is a person who plans, designs and oversees the construction of buildings. To practice architecture means to provide services in connection with the design of buildings and the space within the site surrounding the buildings that h ...
, although the detailed design will still be performed by civil engineers. Depending upon the height of the building, it may be designed by an
architect An architect is a person who plans, designs and oversees the construction of buildings. To practice architecture means to provide services in connection with the design of buildings and the space within the site surrounding the buildings that h ...
or for tall buildings,a
structural engineer Structural engineers analyze, design, plan, and research structural components and structural systems to achieve design goals and ensure the safety and comfort of users or occupants. Their work takes account mainly of safety, technical, economic ...
, and if an industrial or processing plant is required, the structures and foundation work will still be done by civil engineers, but the process equipment and piping may be designed by
industrial engineer Industrial engineering is an engineering profession that is concerned with the optimization of complex processes, systems, or organizations by developing, improving and implementing integrated systems of people, money, knowledge, information a ...
or a
process engineer Process engineering is the understanding and application of the fundamental principles and laws of nature that allow humans to transform raw material and energy into products that are useful to society, at an industrial level. By taking advantage ...
. In terms of engineering tasks, the design and construction management process usually follows these steps: ;Planning and Preliminary Engineering Studies In general, infrastructure is planned by
urban planners An urban planner (also known as town planner) is a professional who practices in the field of town planning, urban planning or city planning. An urban planner may focus on a specific area of practice and have a title such as city planner, town ...
or
civil engineers This list of civil engineers is a list of notable people who have been trained in or have practiced civil engineering. A B C D E F G H I J K L M N O P Q R S T U ...
at a high level for transportation, water/waste water, electrical, urban zones, parks and other public and private systems. These plans typically analyze policy decisions and impacts of trade offs for alternatives. In addition, planners may lead or assist with environmental review that are commonly required to construct infrastructure. Colloquially this process is referred to as Infrastructure Planning. These activities are usually performed in preparation for preliminary engineering or
conceptual design Conceptual design is an early phase of the design process, in which the broad outlines of function and form of something are articulated. It includes the design of interactions, experiences, processes, and strategies. It involves an understanding of ...
that is led by
civil engineers This list of civil engineers is a list of notable people who have been trained in or have practiced civil engineering. A B C D E F G H I J K L M N O P Q R S T U ...
or
architects An architect is a person who plans, designs and oversees the construction of buildings. To practice architecture means to provide services in connection with the design of buildings and the space within the site surrounding the buildings that h ...
. Preliminary studies may also be performed and may include steps such as: *Determine existing and future traffic loads, determine existing capacity, and estimate the existing and future standards of service *Conduct a preliminary survey and obtain information from existing air photos, maps, and plans *Identify possible conflicts with other assets or topographical features *Perform environmental impact studies: **Evaluate the impact on the human environment (
noise pollution Noise pollution, also known as environmental noise or sound pollution, is the propagation of noise with ranging impacts on the activity of human or animal life, most of them are harmful to a degree. The source of outdoor noise worldwide is main ...
, odors, electromagnetic interference, etc.) **Evaluate the
impact Impact may refer to: * Impact (mechanics), a high force or shock (mechanics) over a short time period * Impact, Texas, a town in Taylor County, Texas, US Science and technology * Impact crater, a meteor crater caused by an impact event * Impac ...
on the
natural environment The natural environment or natural world encompasses all life, living and non-living things occurring nature, naturally, meaning in this case not Artificiality, artificial. The term is most often applied to the Earth or some parts of Earth. Th ...
(disturbance of natural ecosystems) **Evaluate the possible presence of contaminated soils; **Given various time horizons, standards of service, environmental impacts, and conflicts with existing structures or terrain, propose various preliminary designs **Estimate the costs of the various designs, and make recommendations ;Detailed Survey *Perform a detailed
survey Survey may refer to: Statistics and human research * Statistical survey, a method for collecting quantitative information about items in a population * Survey (human research), including opinion polls Spatial measurement * Surveying, the techniq ...
of the construction site *Obtain "as built" drawings of existing infrastructure *Dig exploratory pits where required to survey underground infrastructure *Perform a
geotechnical Geotechnical engineering is the branch of civil engineering concerned with the engineering behavior of earth materials. It uses the principles of soil mechanics and rock mechanics for the solution of its respective engineering problems. It al ...
survey to determine the bearing capacity of soils and rock *Perform soil sampling and testing to estimate nature, degree and extent of
soil contamination Soil contamination, soil pollution, or land pollution as a part of land degradation is caused by the presence of xenobiotic (human-made) chemicals or other alteration in the natural soil environment. It is typically caused by industrial activity ...
;Detailed Engineering *Prepare detailed
plans A plan is typically any diagram or list of steps with details of timing and resources, used to achieve an objective to do something. It is commonly understood as a temporal set of intended actions through which one expects to achieve a goal. ...
and
technical specifications A specification often refers to a set of documented requirements to be satisfied by a material, design, product, or service. A specification is often a type of technical standard. There are different types of technical or engineering specificati ...
*Prepare a detailed
bill of materials A bill of materials or product structure (sometimes bill of material, BOM or associated list) is a list of the raw materials, sub-assemblies, intermediate assemblies, sub-components, parts, and the quantities of each needed to manufacture an end ...
*Prepare a detailed cost estimate *Establish a general
work schedule A schedule or a timetable, as a basic time-management tool, consists of a list of times at which possible tasks, events, or actions are intended to take place, or of a sequence of events in the chronological order in which such things are i ...
;Authorisation *Obtain authorisation from environmental and other regulatory agencies *Obtain authorisation from any owners or operators of assets affected by the work *Inform
emergency services Emergency services and rescue services are organizations that ensure public safety and health by addressing and resolving different emergencies. Some of these agencies exist solely for addressing certain types of emergencies, while others deal wit ...
, and prepare contingency plans in case of emergencies ;Tendering *Prepare administrative clauses and other tendering documents *Organise and announce a
call for tenders An invitation to tender (ITT, otherwise known as a call for bids or a request for tenders) is a formal, structured procedure for generating competing offers from different potential suppliers or contractors looking to obtain an award of business ...
*Answer contractor questions and issue addenda during the tendering process *Receive and analyse tenders, and make a recommendation to the owner ;Construction Supervision *Once the construction
contract A contract is a legally enforceable agreement between two or more parties that creates, defines, and governs mutual rights and obligations between them. A contract typically involves the transfer of goods, services, money, or a promise to tran ...
has been signed between the
owner Ownership is the state or fact of legal possession and control over property, which may be any asset, tangible or intangible. Ownership can involve multiple rights, collectively referred to as title, which may be separated and held by different ...
and the
general contractor A general contractor, main contractor or prime contractor is responsible for the day-to-day oversight of a construction site, management of vendors and trades, and the communication of information to all involved parties throughout the course of ...
, all authorisations have been obtained, and all pre-construction submittals have been received from the general contractor, the construction supervisor issues an "Order to begin construction" *Regularly schedule meetings and obtain contact information for the general contractor (GC) and all interested parties *Obtain a detailed
work schedule A schedule or a timetable, as a basic time-management tool, consists of a list of times at which possible tasks, events, or actions are intended to take place, or of a sequence of events in the chronological order in which such things are i ...
and list of subcontractors from the GC *Obtain detailed traffic diversion and emergency plans from the GC *Obtain proof of certification, insurance and bonds *Examine
shop drawings A shop drawing is a drawing or set of drawings produced by the contractor, supplier, manufacturer, subcontractor, consultants, or fabricator. Shop drawings are typically required for prefabricated components. Examples of these include: ele ...
submitted by the GC *Receive reports from the materials
quality control Quality control (QC) is a process by which entities review the quality of all factors involved in production. ISO 9000 defines quality control as "a part of quality management focused on fulfilling quality requirements". This approach places ...
lab *When required, review
Change request A change request (aka Change Control Request, or CCR) is a document containing a call for an adjustment of a system; it is of great importance in the change management process. Purpose and elements A change request is declarative, i.e. it stat ...
s from the GC, and issue construction directives and change orders *Follow work progress and authorise partial payments *When substantially completed, inspect the work and prepare a list of deficiencies *Supervise testing and commissioning *Verify that all operating and maintenance manuals, as well as
warranties In contract law, a warranty is a promise which is not a condition of the contract or an innominate term: (1) it is a term "not going to the root of the contract",Hogg M. (2011). ''Promises and Contract Law: Comparative Perspectives''p. 48 Cambri ...
, are complete *Prepare "as built" drawings *Make a final inspection, issue a certificate of final completion, and authorise the final payment File:BBI 2010-07-23 5.JPG, The
Berlin Brandenburg Airport Berlin Brandenburg Airport ''Willy Brandt'' (german: Flughafen Berlin Brandenburg "Willy Brandt", , ) is an international airport in Schönefeld, just south of the German capital Berlin in the state of Brandenburg. Named after the former ...
under construction.


Economic, social and environmental impacts of infrastructure


Impact on economic development

Investment in infrastructure is part of the
capital accumulation Capital accumulation is the dynamic that motivates the pursuit of profit, involving the investment of money or any financial asset with the goal of increasing the initial monetary value of said asset as a financial return whether in the form o ...
required for economic development and may affect
socioeconomic Socioeconomics (also known as social economics) is the social science that studies how economic activity affects and is shaped by social processes. In general it analyzes how modern societies progress, stagnate, or regress because of their local ...
measures of welfare. The
causality Causality (also referred to as causation, or cause and effect) is influence by which one event, process, state, or object (''a'' ''cause'') contributes to the production of another event, process, state, or object (an ''effect'') where the cau ...
of infrastructure and
economic growth Economic growth can be defined as the increase or improvement in the inflation-adjusted market value of the goods and services produced by an economy in a financial year. Statisticians conventionally measure such growth as the percent rate of ...
has always been in debate. Generally, infrastructure plays a critical role in expanding national production capacity, which leads to increase in a country's wealth. In developing nations, expansions in
electric grid An electrical grid is an interconnected network for electricity delivery from producers to consumers. Electrical grids vary in size and can cover whole countries or continents. It consists of:Kaplan, S. M. (2009). Smart Grid. Electrical Power ...
s,
roadways A carriageway (British English) or roadway (North American English) consists of a width of road on which a vehicle is not restricted by any physical barriers or separation to move lateral movement, laterally. A carriageway generally consists of ...
, and
railways Rail transport (also known as train transport) is a means of transport that transfers passengers and goods on wheeled vehicles running on rails, which are incorporated in tracks. In contrast to road transport, where the vehicles run on a pre ...
show marked growth in economic development. However, the relationship does not remain in advanced nations who witness more and more lower
rates of return In finance, return is a profit on an investment. It comprises any change in value of the investment, and/or cash flows (or securities, or other investments) which the investor receives from that investment, such as interest payments, coupons, ...
on such infrastructure
investments Investment is the dedication of money to purchase of an asset to attain an increase in value over a period of time. Investment requires a sacrifice of some present asset, such as time, money, or effort. In finance, the purpose of investing is ...
. Nevertheless, infrastructure yields indirect benefits through the supply chain, land values, small business growth, consumer sales, and social benefits of community development and access to opportunity. The
American Society of Civil Engineers American(s) may refer to: * American, something of, from, or related to the United States of America, commonly known as the "United States" or "America" ** Americans, citizens and nationals of the United States of America ** American ancestry, pe ...
cite the many transformative projects that have shaped the growth of the United States including the
Transcontinental Railroad A transcontinental railroad or transcontinental railway is contiguous railroad trackage, that crosses a continental land mass and has terminals at different oceans or continental borders. Such networks can be via the tracks of either a single ...
that connected major cities from the Atlantic to Pacific coast; the
Panama Canal The Panama Canal ( es, Canal de Panamá, link=no) is an artificial waterway in Panama that connects the Atlantic Ocean with the Pacific Ocean and divides North and South America. The canal cuts across the Isthmus of Panama and is a conduit ...
that revolutionised shipment in connected the two oceans in the Western hemisphere; the Interstate Highway System that spawned the mobility of the masses; and still others that include the
Hoover Dam Hoover Dam is a concrete arch-gravity dam in the Black Canyon of the Colorado River, on the border between the U.S. states of Nevada and Arizona. It was constructed between 1931 and 1936 during the Great Depression and was dedicated on Se ...
,
Trans-Alaskan pipeline The Trans-Alaska Pipeline System (TAPS) is an oil transportation system spanning Alaska, including the trans-Alaska crude-oil pipeline, 11 pump stations, several hundred miles of feeder pipelines, and the Valdez Marine Terminal. TAPS is one o ...
, and many bridges (the
Golden Gate The Golden Gate is a strait on the west coast of North America that connects San Francisco Bay to the Pacific Ocean. It is defined by the headlands of the San Francisco Peninsula and the Marin Peninsula, and, since 1937, has been spanned by th ...
,
Brooklyn Brooklyn () is a borough of New York City, coextensive with Kings County, in the U.S. state of New York. Kings County is the most populous county in the State of New York, and the second-most densely populated county in the United States, be ...
, and
San Francisco–Oakland Bay Bridge The San Francisco–Oakland Bay Bridge, known locally as the Bay Bridge, is a complex of bridges spanning San Francisco Bay in California. As part of Interstate 80 in California, Interstate 80 and the direct road between San Francisco and Oakland ...
). All these efforts are testimony to the infrastructure and economic development correlation. European and Asian
development economist Development economics is a branch of economics which deals with economic aspects of the development process in low- and middle- income countries. Its focus is not only on methods of promoting economic development, economic growth and structural ...
s have also argued that the existence of modern rail infrastructure is a significant indicator of a country’s economic advancement: this perspective is illustrated notably through the
Basic Rail Transportation Infrastructure Index The Basic Rail Transportation Infrastructure Index (BRTI Index) is a synthetic measure combining rail transportation metrics (existence of modern rail networks and average speed of main inter-urban itineraries) and cost efficiency observations, used ...
(known as BRTI Index)


Use as economic stimulus

During the
Great Depression The Great Depression (19291939) was an economic shock that impacted most countries across the world. It was a period of economic depression that became evident after a major fall in stock prices in the United States. The economic contagio ...
of the 1930s, many governments undertook public works projects in order to create jobs and stimulate the economy. The economist
John Maynard Keynes John Maynard Keynes, 1st Baron Keynes, ( ; 5 June 1883 – 21 April 1946), was an English economist whose ideas fundamentally changed the theory and practice of macroeconomics and the economic policies of governments. Originally trained in ...
provided a theoretical justification for this policy in ''
The General Theory of Employment, Interest and Money ''The General Theory of Employment, Interest and Money'' is a book by English economist John Maynard Keynes published in February 1936. It caused a profound shift in economic thought, giving macroeconomics a central place in economic theory and ...
'', published in 1936. Following the
global financial crisis of 2008–2009 Global means of or referring to a globe and may also refer to: Entertainment * ''Global'' (Paul van Dyk album), 2003 * ''Global'' (Bunji Garlin album), 2007 * ''Global'' (Humanoid album), 1989 * ''Global'' (Todd Rundgren album), 2015 * Bruno ...
, some again proposed investing in infrastructure as a means of stimulating the economy (see the
American Recovery and Reinvestment Act of 2009 The American Recovery and Reinvestment Act of 2009 (ARRA) (), nicknamed the Recovery Act, was a stimulus package enacted by the 111th U.S. Congress and signed into law by President Barack Obama in February 2009. Developed in response to the Gr ...
).


Environmental impacts

While infrastructure development may initially be damaging to the
natural environment The natural environment or natural world encompasses all life, living and non-living things occurring nature, naturally, meaning in this case not Artificiality, artificial. The term is most often applied to the Earth or some parts of Earth. Th ...
, justifying the need to assess environmental impacts, it may contribute in mitigating the "perfect storm" of environmental and energy
sustainability Specific definitions of sustainability are difficult to agree on and have varied in the literature and over time. The concept of sustainability can be used to guide decisions at the global, national, and individual levels (e.g. sustainable livi ...
, particularly in the role transportation plays in
modern society Modernity, a topic in the humanities and social sciences, is both a historical period (the modern era) and the ensemble of particular socio-cultural norms, attitudes and practices that arose in the wake of the Renaissancein the "Age of Reason ...
.Puentes, R. (2008). A Bridge to Somewhere: Rethinking American Transportation for the 21st Century. Brookings Institution Metropolitan Policy Report: Blueprint for American Prosperity series report.
Offshore wind power Offshore wind power or offshore wind energy is the generation of electricity through wind farms in bodies of water, usually at sea. There are higher wind speeds offshore than on land, so offshore farms generate more electricity per amount of c ...
in
England England is a country that is part of the United Kingdom. It shares land borders with Wales to its west and Scotland to its north. The Irish Sea lies northwest and the Celtic Sea to the southwest. It is separated from continental Europe b ...
and
Denmark ) , song = ( en, "King Christian stood by the lofty mast") , song_type = National and royal anthem , image_map = EU-Denmark.svg , map_caption = , subdivision_type = Sovereign state , subdivision_name = Danish Realm, Kingdom of Denmark ...
may cause issues to local ecosystems but are incubators to clean energy technology for the surrounding regions.
Ethanol Ethanol (abbr. EtOH; also called ethyl alcohol, grain alcohol, drinking alcohol, or simply alcohol) is an organic compound. It is an Alcohol (chemistry), alcohol with the chemical formula . Its formula can be also written as or (an ethyl ...
production may overuse available farmland in
Brazil Brazil ( pt, Brasil; ), officially the Federative Republic of Brazil (Portuguese: ), is the largest country in both South America and Latin America. At and with over 217 million people, Brazil is the world's fifth-largest country by area ...
but have propelled the country to
energy independence Energy independence is independence or autarky regarding energy resources, energy supply and/or energy generation by the energy industry. Energy dependence, in general, refers to mankind's general dependence on either primary or secondary ene ...
.
High-speed rail High-speed rail (HSR) is a type of rail system that runs significantly faster than traditional rail, using an integrated system of specialised rolling stock and dedicated tracks. While there is no single standard that applies worldwide, lines ...
may cause noise and wide swathes of rights-of-way through countrysides and urban communities but have helped China, Spain, France, Germany, Japan, and other nations deal with concurrent issues of economic
competitiveness In economics, competition is a scenario where different economic firmsThis article follows the general economic convention of referring to all actors as firms; examples in include individuals and brands or divisions within the same (legal) firm ...
,
climate change In common usage, climate change describes global warming—the ongoing increase in global average temperature—and its effects on Earth's climate system. Climate change in a broader sense also includes previous long-term changes to E ...
,
energy use Energy consumption is the amount of energy used. Biology In the body, energy consumption is part of energy homeostasis. It derived from food energy. Energy consumption in the body is a product of the basal metabolic rate and the physical activity ...
, and
built environment The term built environment refers to human-made conditions and is often used in architecture, landscape architecture, urban planning, public health, sociology, and anthropology, among others. These curated spaces provide the setting for human ac ...
sustainability Specific definitions of sustainability are difficult to agree on and have varied in the literature and over time. The concept of sustainability can be used to guide decisions at the global, national, and individual levels (e.g. sustainable livi ...
.


See also

*
Infrastructure-based development Infrastructure-based economic development, also called infrastructure-driven development, combines key policy characteristics inherited from the Rooseveltian progressivist tradition and neo-Keynesian economics in the United States, France's Gaull ...
*
Rural development Rural development is the process of improving the quality life and economic well-being of people living in rural areas, often relatively isolated and sparsely populated areas. Rural development has traditionally centered on the exploitation of l ...
* Engineering economics (civil engineering) *
Asset Management Plan An asset management plan (AMP) is a tactical plan for managing an organisation's infrastructure and other assets to deliver an agreed standard of service. Typically, an asset management plan will cover more than a single asset, taking a system appro ...
*
Infrastructure asset management Infrastructure asset management is the integrated, multidisciplinary set of strategies in sustaining public infrastructure assets such as water treatment facilities, sewer lines, roads, utility grids, bridges, and railways. Generally, the process ...
*
Project finance Project finance is the long-term financing of infrastructure and industrial projects based upon the projected cash flows of the project rather than the balance sheets of its sponsors. Usually, a project financing structure involves a number of equi ...
*
Public capital Public capital is the aggregate body of government-owned assets that are used as a means for productivity.Aschauer, D. A. (1990). Why is infrastructure important? Conference Series roceedings Federal Reserve Bank of Boston. Pp. 21-68. Such asset ...
* Infrastructure debt *
American School (economics) The American School, also known as the National System, represents three different yet related constructs in politics, policy and philosophy. The policy existed from the 1790s to the 1970s, waxing and waning in actual degrees and details of imp ...
*
Build–operate–transfer Build–operate–transfer (BOT) or build–own–operate–transfer (BOOT) is a form of project delivery method, usually for large-scale infrastructure projects, wherein a private entity receives a concession from the public sector (or the priva ...
*
Public–private partnership A public–private partnership (PPP, 3P, or P3) is a long-term arrangement between a government and private sector institutions.Hodge, G. A and Greve, C. (2007), Public–Private Partnerships: An International Performance Review, Public Administ ...
*
Asset Management Plan An asset management plan (AMP) is a tactical plan for managing an organisation's infrastructure and other assets to deliver an agreed standard of service. Typically, an asset management plan will cover more than a single asset, taking a system appro ...
*
Infrastructure asset management Infrastructure asset management is the integrated, multidisciplinary set of strategies in sustaining public infrastructure assets such as water treatment facilities, sewer lines, roads, utility grids, bridges, and railways. Generally, the process ...
*
Natural monopoly A natural monopoly is a monopoly in an industry in which high infrastructural costs and other barriers to entry relative to the size of the market give the largest supplier in an industry, often the first supplier in a market, an overwhelming adv ...
* Infrastructure bias


References


Bibliography

* Koh, Jae Myong, ''Green Infrastructure Financing: Institutional Investors, PPPs and Bankable Projects'', London: Palgrave Macmillan, 2018. . * Larry W. Beeferman, "Pension Fund Investment in Infrastructure: A Resource Paper", Capital Matter (Occasional Paper Series), No.3 December 2008 * A. Eberhard, "Infrastructure Regulation in Developing Countries", PPIAF Working Paper No. 4 (2007) World Bank * M. Nicolas J. Firzli & Vincent Bazi, “Infrastructure Investments in an Age of Austerity : The Pension and Sovereign Funds Perspective”, published jointly in Revue Analyse Financière, Q4 2011 issue, pp. 34– 37 and USAK/JTW July 30, 2011 (online edition) * Georg Inderst, "Pension Fund Investment in Infrastructure", OECD Working Papers on Insurance and Private Pensions, No. 32 (2009) * * *


External links


Body of Knowledge on Infrastructure Regulation

Next Generation Infrastructures international research programme

Report Card on America's Infrastructure
{{Rail tracks Civil engineering Construction Economic development Infrastructure