Developing infrastructure for economic progress

Most of the developed economies started investing heavily on economic and social infrastructure in the early 1960s. Developing and underdeveloped economies, however, were far behind in this field. Infrastructure of a country has been termed by economists as the foundation of industrial growth, economic progress and wellbeing of the people. Poor infrastructure lowers a country's competitiveness at national and international levels and slows down economic growth.
Inadequate infrastructure also causes loss of quality life, illness and death in developing countries. All these have highlighted the urgency of more investment in this field. The need for infrastructure development is the great challenge of the time for the present-day world, especially for developing countries which are struggling against poverty and for economic progress and higher standard of living.
The correlation between infrastructural development and economic growth has, in recent years, become one of the most important concerns of the day. Economic growth leads to an increase in per capita Gross Domestic Product (GDP). Infrastructure encompasses investments and related services that raise the productivity of other physical capital like transport, communications, power, water systems, sea ports, airports and IT facilities. Social infrastructure like education and health, on the other hand, needs investments and services that raise productivity of human capital.
Economic infrastructure is just like the foundation of a building. Without a strong foundation, no building will last long and may collapse at any time. Investment by developing countries in economic and social infrastructure development is very poor. The overall investment needs to be doubled from the present 2 per cent to 3 per cent to 5 per cent to 6 per cent.
Developed countries like Switzerland and Singapore continue to top global economic competitiveness rankings published annually by the World Economic Forum (WEF), a not-for-profit international organisation behind the annual economic conferences in Davos, Switzerland. The United States, up from fifth to third place; Japan, up from ninth to sixth place; and the UK, up from 10th to ninth place, improved their overall rankings in this year's report. However, the quality of the UK's infrastructure continues to rank below that of many of its competitors, according to the report. Its performance improved slightly this year  to 27th, up from 28th in last year's report but still well below the quality of infrastructure in countries including Switzerland, Hong Kong, the United Arab Emirates, Finland and Singapore. According to the report, access to bank loans and complex tax rates remain the biggest barrier to doing business in the UK.
The WEF has tracked competitiveness of different world economies since 2004. Countries are ranked against 12 categories, or pillars, which, when taken together, make up a wide-ranging picture of a country's competitiveness. These are institutions, infrastructure, macroeconomic environment, health and primary education, higher education and training, goods market efficiency, labour market efficiency, financial market development, technological readiness, market size and business sophistication. According to the WEF, the leading economies on its list all had a track record in developing, accessing and utilising available talent, as well as in making investments. It also praised countries including the US, Japan and the UK for their extraordinary and bold monetary policies.
The World Economic Forum regularly rates countries' position on competitiveness based on 12 pillars. Infrastructure is one of the key pillars for developing economies like Bangladesh. An evaluation of infrastructure among developing Asian countries shows that despite progress, Bangladesh is still substantially far behind in terms of quality of infrastructure compared to all the countries shown in Table 1 except Myanmar.  The gap in infrastructure quality is especially large when compared with Thailand, China, India and Sri Lanka.  Bangladesh needs to concentrate more on efficient infrastructure investments along with necessary institutional changes relating to execution, regulation, and policy formulation. More fiscal supports through the national budget and private participation in infrastructure development may bring revolutionary changes in the economic growth in Bangladesh.
The economic and social infrastructure in Bangladesh is poor among South Asian countries as envisaged from the chart. Access to basic economic infrastructure like roads, communication, electricity, power, water, sanitation, still remain a key challenge to industrialisation and poverty alleviation. Social infrastructure such as education and health also is a key challenge for Bangladesh as millions of people remain illiterate and are without proper health care even in the 21st Century. The railway in Bangladesh is inadequate to transport industrial goods and services on time and very old and traditional rails have been in use in the country since its independence in 1971. The road communication depicts the worst scenario. The general people in urban and rural areas, industrialists and business communities of the country are the worst sufferers. The whole nation has been paying heavily for traffic jams in cities, on highways and on inter-district roads for the last few years. This scribe had a chance to see the impoverished conditions of some roads in the industrial areas of Ashulia, Savar, Bipal, Gazipur, etc. Industrial transports like trailers, covered vans, trucks and vans face huge problems due to poor conditions of roads, insufficient space and poor length of roads. These problems cause huge losses to the country by incurring more transport costs, delay in shipment, slow-down in business activities, wastage of valuable time of the entrepreneurs and many more.
The extreme poor in rural communities in Latin America live on average 5 kilometres or more from the nearest paved road, which is almost twice as far as non-poor rural households. Over the past 15 years, infrastructure coverage and quality have increased in most Latin American and Caribbean countries. There have been major improvements in access to water, sanitation, electricity, telecommunications, ports, and airports. Only in roads, the coverage has not improved much, but still efforts and resources have been invested to improve quality of trunk networks. Latin American countries are rich in natural resources. But they are far behind the developed economies in terms of economic and social infrastructure.
Insufficient, outdated, poor quality and unreliable infrastructure -- economic and social--- negate economic growth worldwide, predominantly in developing countries. Poor infrastructure is often a result of insufficient spending, poor planning and coordination and weak analysis, corruption, political gains and poor maintenance. Infrastructure development deserves to be the topmost priority list of decision-makers, leaders and stakeholders in developing countries for swift economic uplift and sustainable growth. Without sufficient and adequate economic and social infrastructure, no country can develop economically, socially and financially.  Economic development minus faster development of infrastructure would be a daydream for a developing country.

The writer is the Chief Financial Officer (CFO) of a private group of industries.
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