By Krysten Jetson
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Excellent infrastructure is the backbone and chief driver of socio-economic development, which every country strives to achieve. In the US during the 1950s and 1960s, massive and strategic investment was made to build world-class interstate highway systems and transportation infrastructure. All this contributed in making our country the undisputed world leader and an economic superpower. Investment in surface transportation helps to connect people, drive commerce and maintain global competitiveness. At the aggregate level, efficient transport systems reduce costs in many economic sectors by providing better accessibility to markets, increasing employment, bringing in foreign investment and improving global presence of countries. Transport carries an important social, economic and environmental load, which can never be over-stated.
The socio-economic significance of infrastructure development is extensive. Let’s have a look into the impact of infrastructure development on our lives.
Economic effects of transportation infrastructure
In the US, the Federal Highway Administration estimates that $170 billion in capital investment would be needed on an annual basis to significantly improve conditions and performance of our infrastructure. Once the envy of the world, America’s critical infrastructure, including its roads, bridges, mass transit systems and systems for delivering energy, may soon find it difficult to meet society’s needs. Let’s see how the transport infrastructure affects the economy.
1) Mobility and economic effects. Economies that possess greater mobility are often those with better opportunities to develop, than those with scarce mobility. Reduced mobility impedes development while greater mobility is a catalyst for development. According to recent reports, forty-two percent of America’s major urban highways remain congested, costing the economy an estimated $101 billion in wasted time and fuel annually. Better roads and connectivity can translate into massive savings, both for the state as well as citizens. Transportation also weaves a complex web of relationships between consumer, manufacturer and distributor. The productivity of space, capital and labor is enhanced with the efficiency of distribution and personal mobility.
- Less cost. A more efficient distribution and procurement network directly results in lesser prices for consumers. This is because transportation costs form a major chunk of the total cost of each output in manufacturing.
- Wider reach to business. With better transport facilities there is access to a wider market or consumer base which leads to better economies of scale in production, distribution and consumption.
- Better and diverse products. Good infrastructures give access to larger and diverse base of quality inputs, and broader markets for diverse outputs. This is good for the consumer as well as the manufacturer.
- Increased competition. When transportation is efficient, there is a wider market for goods and services, resulting in increased competition. A wider array of goods and services to choose from, reduced cost and improved quality are some of the benefits passed on to the consumers. Also, this promotes innovation and technological advancement.
2) Mobility and economic opportunities. Transportation development and improvement that took place since industrial revolution has shaped and transformed economies and social geography of nations.
- Attractive to foreign investors. Excellent infrastructure has always made the US an attractive destination for global corporations to invest and do business in. Good connectivity lowers transport costs, and contributes to reliable and cost-efficient supply chain management. A poor transport service level can negatively affect the competitiveness of regions and corporations, and thus have a negative impact on the brand value of our country.
- Attractive to new-age businesses. Transport infrastructure is always important, but their relative importance in supporting the changing demands of economy may evolve. When an economy shifts from being manufacturing-based to service-based, there is more orientation towards efficiency of logistics and urban transportation. An infrastructure that grows and evolves to support the changing needs of the economy is attractive to both businesses as well as stakeholders like new-age employees and students.
- Increased employment opportunities. A growing economy opens up new and expanding range of employment potential as well. New businesses and sunrise industries are voracious creators of job opportunities. The ‘feel good’ vibe that they bring into ageing, developed economies can be quite rejuvenating and energizing. Transport systems need to evolve in time and space as they include the timing and the nature of the impact of transport on economic development.
Social effects of transportation infrastructure
Roads and bridges change the face of landscapes. Increased connectivity brings societies closer to the outside world, and brings in influences from far and wide. The societal and cultural impacts are many.
- Mobility benefits. Though societies on the whole reap benefits of growing and improved connectivity, some people enjoy it more than the others. Higher the income, the more the opportunity to benefit from infrastructure growth and economic opportunities. They also have increased ability to afford travel. Inclusive growth, by promoting connectivity in rural, under-developed and poorer regions can help all sections of society benefit.
- Rising land value. With roads and highways linking vast areas of land with cities and towns, land prices also show a trickle-down effect from those in urban locations. There has been quite marked and sharp increase in land prices observed once infrastructure improves.
- Improved quality of life. When transportation facilities increase, especially in far-flung and land-locked areas, prices of goods and services come down drastically. A wider array of products is available at reasonable prices. This helps to improve household finance and savings.
- Congestion and accidents. A growing population and ageing infrastructure leads to overcrowding and congestion in urban areas. Serpentine traffic-jams lead to wastage of time, fuel and energy. Accidents also become common. Environmental pollution used to be a major issue, but with strict emission laws there is a continued effort to curb the menace.
Conclusion
Infrastructure determines the longevity and success of a nation. A good, upgraded and efficient transport infrastructure is essential for a strong and thriving economy. According to the American Society of Civil Engineers, an investment of $3.6 trillion will be needed by 2020 for the repair, upgrade and development of infrastructure. But the available funds are nowhere near this gigantic figure. Experts say that while it is important to have more money because the needs are so great, there is also a need to cut spending on shiny new projects in places with insufficient demand. The authorities need to spend on maintaining and improving infrastructure in the places with some of the greatest need.
Author Bio:
Krysten Jetson is a freelance writer specializing in the construction industry. She loves sharing her expertise on various aspects of the construction industry, especially safety, such as fall protection, workers safety etc. She has many years of professional experience including working with clients to build their business and brand through internet marketing strategies.