Infrastructure

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While you’ll find several references to Infrastructure on this site, I think this time around I’ll leave it to the experts to do the convincing. Paja akulu anati mutu umodzi siwusenza denga

And if one takes time to browse through the cited references below (some of which are straight off page 1 + 2 of Google), it’s hard to argue against the fact that Infrastructure is one of the essential drivers of economic development. In this sense, and for the avoidance of doubt,  infrastructure is not limited to roads, railways, airports and buildings (for hotels, schools, Universities, hospitals, business centres, research facilities, etc), but also includes for example a good telecommunication network (internet, voice, data and the like) and power supply.

Infrastructure for sustainable development – European Commission

Intro reads: ” Good quality infrastructure is a key ingredient for sustainable development. All countries need efficient transport, sanitation, energy and communications systems if they are to prosper and provide a decent standard of living for their populations. Unfortunately, many developing countries possess poor infrastructure, which hampers their growth and ability to trade in the global economy. “

Infrastructure’s value to economic growth – Richard Lee, Partner, KPMG (via BBC)

which includes the statement : “…In fact, a recent KPMG International survey found that an overwhelming majority – 90% – of business executives said that the availability and quality of infrastructure affects where they locate their business operations…”

Needs For and Benefits of Infrastructure Connectivity – Asian Development Bank Institute
which includes the statement: “… The rapid economic and population growth of Asian economies in recent years has put huge pressure on its existing infrastructure, particularly in transport and energy, but also in communications. Asia’s infrastructure is world-class in parts, but is generally below the global average. This is a bottleneck to future growth, a threat to competitiveness, and an obstacle to poverty reduction.”
which includes the following statement: – “…An adequate infrastructure is a prerequisite to economic development. Transportation and communications are important in developing and strengthening social, political, and commercial ties. These ties must be developed before trade can be handled on a regular basis.”
Why Is Infrastructure Important – David Alan Aschauer, formerly Senior Economist, Federal Reserve Bank of Chicago, and now (at the date of writing/publication) Elmer W.Campbell Professor of Economics, Bates College
Infrastructure and Poverty – The Global Poverty Project
the Intro reads: “Infrastructure – physical resources like roads, telecommunication networks, schools and drains – is necessary for a society to function: people can’t access healthcare if there are no hospitals; trade can’t take place if there are no roads on which to transport goods to markets. Infrastructure facilitates the basic functions of a society that are necessary to transport resources and people, produce and trade goods, provide essential services and ultimately reduce poverty.”
it follows with ” Lack of infrastructure also leads to lack of employment by acting as a disincentive to investment. Companies who struggle to produce and sell goods in an area with inadequate roads, electricity or water supply do not want to set up the factories or businesses that could potentially generate employment, improve living standards and reduce poverty. “
and “Lack of infrastructure can also lead to poor health and high mortality. Where there are no clinics or hospitals available, or where lack of roads or bridges makes them inaccessible, people cannot access the medical services that they require to be healthy and productive. A villager in Mozambique explains “The most dangerous thing is that [cholera] has always appeared during the rainy season, and it is then that the river is in spate and boats cannot cross.”
The Broader Benefits of Transportation Infrastructure – Ian Sue Wing, William P. Anderson and T.R. Lakshmanan, Center for Transportation Studies and Dept. of Geography & Environment, Boston University [similar article here]
uses the term Meso-scale to describe their approach. A slide from their presentation is quite appropriate in summarising some of the developmental + ‘equilibrium’ impacts, and worth replication:-
infra-messo
Finance and Infrastructure: The Economic Benefits of Infrastructure Projects Procured with Private Finance –  Andrew W Morley, International Congress Washington, D.C. USA, April 19-26 2002.
Infrastructure – Engineers Against Poverty
Intro reads as follows: “Without significant progress in the provision of infrastructure services it will be impossible for many countries to significantly achieve the Millennium Development Goals (MDGs). Globally, more than 1 billion people have no access to roads, 900 million do not have safe drinking water, 2.3 billion lack reliable sources of energy, 2.5 billion have no sanitation  facilities and 4 billion are without modern communication services.”
which contains the paragraph “When it comes to infrastructure development, Thailand has done very well compared with some other Southeast Asian neighbors. In fact, appropriate infrastructure, including access to power and water, has helped Thailand fuel rapid economic growth during the past three decades. Good infrastructure has made Thailand attractive to foreign investment, helped facilitate international trade, and improved the efficiency of everyday business activities. All of these led to more jobs, and more jobs led to more income for the poor. For some not-so-poor people, good infrastructure also helps them improve productivity or fulfill their lifestyles.”
RURAL INFRASTRUCTURE AND ECONOMIC DEVELOPMENT –  Dr. Mohammad Tarique, Lecturer, University Dept. of Economics, B.R.Ambedkar Bihar University, Muzaffarpur.
Abstract reads: “Infrastructure development has a key role to play in both economic growth and poverty reduction. Failure to accelerate investments in rural infrastructure will make a mockery of efforts to achieve the Millennium Development Goals in poor developing countries while at the same time severely limit opportunities for these countries to benefit from trade liberalisation, international capital markets and other potential benefits offered by globalisation”
Private Sector Participation in Infrastructure:the case of Thailand – Deunden Nikomborirak – Asian Development Bank Institute Discussion Paper No. 19
Road Funding: Time for a Change :- Economic Growth Benefits of Transportation Infrastructure Investment – Dr. John C. Taylor,  Associate professor of marketing and logistics at Grand Valley State University and a senior policy analyst with the Mackinac Center for Public Policy in Midland, Michigan.
which contains the statement “…No, the key benefit and reason for transportation investment is from helping to make businesses and individuals more productive, across the geographic landscape. We rely on our transportation investments to increase the economy’s overall productivity – both in terms of making individual travel (business and personal) faster and more reliable, and in terms of the productivity benefits of making freight flows faster and more reliable…”
World Bank — Malawi’s infrastructure: A continental perspective: Vivien Foster; Maria Shkaratan, ISSN: 1813-9450.

As you can see, the above papers + articles present a credible argument that a good and functional infrastructure is essential for economic development.
But that’s not to say that there are no credible counter arguments against infrastructure. That’s not what I’m saying. I’m sure one can cite the prevention of deforestation or preservation of natural habitats as factors against excessive infrastructure. Also, there is the issue of encouraging tourism which could probably mean encouraging greater biodiversity, creating / preserving forests  and wildlife reserves (but even in such circumstances, you still need a world-class airport for a good first impression (the kind of impression you get when you first land at Hong Kong International); functional roads (at least 3 lanes on each side between major cities) that minimises journey times; and world-class hotels and resorts. Why should you give tourists (who in large numbers can be the source of much-needed forex revenue) less than what they are accustomed to, and expect that they will return to your country, or recommend a visit to their friends?). Never mind recommendation, how can you compete on the global stage, when your facilities are substandard? Further, why shouldn’t it be possible to build modern factories with reduced carbon footprint (see Marks & Spencer’s ‘eco-factories’ initiative here) side by side with wildlife/forest reserves?
So, considering all this, I find it hard to imagine a credible setting in which arguments against infrastructure may find pre-eminence, over arguments for infrastructure; especially for a poor country whose majority infrastructure was built  50-year ago; whose roads are littered with pot-holes, with virtually no world-class business centres; that has old airports – with poor facilities including smelly badly looked after toilets; a country that experiences intermittent blackouts almost every week; that is struggling to attract significant investment from abroad; a country where 74% of the population live below the poverty line; which is heavily reliant on agriculture and dwindling tobacco exports + has negligible industrial output; has few natural resources; has a large relatively unskilled young population and suffers widespread corruption and cronyism, even in the upper echelons of its government.

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My question to you then is: why are the leaders of such countries not investing heavily (sooner than later) into major infrastructure projects, when it is in fact a determinant factor in economic development and a serious game changer? Is it because they are in fact not cut out for the job and would be better followers instead of leaders?

The relationship between Human Safety and security (Physical security) and Economic Development

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When I was searching for articles that had been written and other research undertaken about the above topic, I hit two small obstacles:-
1. The first is that it seems Google prefers to highlight material on ‘food security‘ or ‘ social security’ and economic growth more than that on ‘human safety and public security’ (or physical security) and economic growth. So I had to sift through quite a lot of stuff to get the references below… which wasn’t much fun!
2. Secondly, there seems to be two major and opposing schools of thought within the research on the issue of safety and economic development. The first group believes that when seeking to improve physical security or public safety of a population, more emphasis should be placed on how the peoples’ lives can be improved, and not on economic outcomes or developmental agendas. And the second group seems to think that economic progress or development is inexplicably linked to human safety and security. That it is impossible to achieve economic development without physical security or public safety, which if you think about it, sounds like a sensible enough hypothesis. Both groups may be right.

However, after considering what has been written, I’m more inclined to side with the second group, in that while the first group has a point in stating that Human Security must be addressed for security’s sake alone, in most parts of Africa, we are quite interested in the security of our people for more than just one reason. And that may be because we have experienced first hand the devastation insufficient security can have (Kidnappings; and the fear it causes, the effect it has on tourism –Somalia, Kenya etc; underinvestment — ask any well seasoned investor what ‘political stability’ means;). In fact if some of the articles below are to go by, I suspect it is truly the case that Economic Development of any serious sort is extremely difficult, or unachievable unless an acceptable level of public safety and security is firmly in place in the country (or possibly even the region) in which such development is to occur. This also suggests that the more secure a place is, the more likely that it will be a favourable place to invest or do business in, although I’m not entirely sure of this second part. My guess is that it is probably a hyperbolic relationship that levels off slightly after acertain point (that point is not fixed and varies from one jurisdiction to the next).

eco-dev
And there are other inter-relationships. For example the ease of dealing with government officials, or the confidence which people have in the court system ( i.e. if people have no confidence over the competence of the court system, few investors will leap to invest in such an environment.); the level of corruption (recently a public official I’m acquainted with suggested that one of the reasons as to why the British closed their embassy in Malawi, was because of the level of corruption in Malawi)….but if there is insufficient security from the start, the insufficient security alone can negatively affect other areas of a society.

fearA survey carried out by Gallup Inc. in 2012 suggested that Freedom from fear of bodily harm is vital not just for economic growth and development, but more fundamentally for the wellbeing of a populace. In that study, Malawi features 30th out of 134 on where less than 50% of people felt safe walking in their neighborhoods at night. Surely that couldn’t be a good thing. The government and the people ought to work together to ensure that criminality, and thuggery are curbed, and that safety is significantly increased.

Among the stories from my childhood, one in particular stands out. When I was younger, I was told by my eldest sister that before I was born, my father never used to lock his car.  He would park it on the driveway, unlocked, and would even go as far as leaving the keys within the ignition slot, It was normal back then. Over the years, even though I’m aware that there were fewer licensed drivers then than is the case now,  I’ve come to appreciate what a great deal this level of personal security was. That in barely 30 years, the security Malawi used to enjoy has deteriorated so much, such that simple acts of confidence of the people would today be considered foolhardy.

Speaking at the 41st Munich Security Conference on “Economic Development and Security” in February 2005 , the German President Horst Köhler said that “…Unless we tackle global poverty, long-term security will remain elusive. A strategy for development is by far the best form of conflict prevention!  Those words are true today as they were then. But in whose best interest is this long-term security? Should Europeans and Americans really continue to take a leading role in combatting Africa’s problems? It may seem like a small adjustment, but in the current financial climate of cuts and receding budgets, why can’t resources be diverted from salary increases or lavish motor vehicle expenses to increased spending on security?

And this idea that security is linked to economic growth is not new, but has been around for years. 18 years ago, in November 1995, Stephen Knack and Philip Keefer published a paper titled Institutions and Economic Performance: Cross-Country Tests Using Alternative Institutional Indicators that found that the quality of institutions, operationalised as the security of property rights and the level of contract enforcement, is crucial to growth and investment.(see more here)

Historically, a desire for national security has had a profound effect on developmental strides in countries across the world. For example, in Japan, it is said that the automotive industry has its origins in the demand for trucks for the Imperial Army (Odigari and Gota 1993).

It all points to the same thing, get your security in place (be it ensuring that goods sent in from abroad get to their destination safe and untempered with, or whether it’s reducing the prevalence of burglaries, or increasing the numbers of policemen on the street) and economic development has a much greater chance of happening and growth thriving!

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