Infrastructural Development: An Engine of Growth – An Empirical Study in SAARC Countries

Introduction

Infrastructure development is an instrumental component in encouraging a country’s economic growth and development. It not only enhances the productivity of a country but also improve the efficiency of production, transportation and communication etc. The accessibility and quality of infrastructure in a region help the domestic firms to take investment decision and determine the region’s attractiveness to foreign investors (Econ South, Federal Reserve Bank of Atlanta, 2008). Infrastructure has two different lines of implication. Alternatively infrastructure may be interpreted as soft infrastructure and hard infrastructure. Physical infrastructure such as road, rail lines, telephone and internet lines etc. which belong to the category of hard infrastructure may be measured by physical units of output. Human infrastructure such as efficient labour, knowledge creation, the way of governing a public and corporate system, political application of good technology etc. fall under the category of soft infrastructure and is expected to play a crucial role in economic growth and development. The health and education of a country also depend on infrastructural development which in turn affects the growth of an economy. According to World Bank (Econ South, Second Quarter, 2008) one in six people worldwide, mostly the poor have inadequate access to water more because of limited access to infrastructure than because of water scarcity. The availability of clean and safe water is necessary for maintaining a healthy population.

Electric power, which is one form of energy, is an essential ingredient of industry, agriculture and transport sector development. Insufficient access to electricity adversely affects the public health care system. Storage and distribution of medicines largely depend on the availability of adequate infrastructure facilities. All the developed countries have adequate power supply so that all the activities are executed efficiently, smoothly in time. On the other hand, all the underdeveloped and developing countries have not sufficient supply of power. The plans of these countries are targeting for building of adequate infrastructure to put their economies on a high growth path (Kalita, 2012).

Efficient transport is a critical component of economic development, globally and nationally. Transport availability affects global development patterns and can be a boost or a barrier to economic growth. Transport’s contribution to economic development can be explained as follows. Transportation investment link factors of production together in a web of relationships between producers and consumers to create a more efficient division of production and provide the means to expand economies of scale and scope. Good transport system reduces the cost and time which contributes to the economic growth. It helps to better utilization of resources through linking the backward region with the forward region which is indispensible for overall economic development. The transport sector helps to expand the market for goods and helps to produce at a large scale through division of labour. It is also essential for the movement of raw materials, fuel, machinery etc. Adequate transport facilities enable the poor section of the community to have better access to education.

The communication system comprises posts, telecommunication, broad band lines and internet lines etc. The communication system helps to provide necessary information about the market condition to the buyers and sellers. It is a vital instrument for global competition which attracts foreign direct investment. Development programmes can only realize their full potential if knowledge and technology are shared effectively, and if populations are motivated and committed to achieve success. Unless people themselves are the driving force of their own development, no amount of investment or provision of technology and inputs will bring about any lasting improvements in their living standards (Diouf, 1994). Communication media and techniques can be powerful tools to advise people about new ideas and methods, to encourage adoption of those ideas and methods, and to improve training overall.