Infrastructure plays an important role in economic growth and development. It creates employment opportunities, contributes to poverty alleviation and ensures technology transfer in any country. Various analyses on the impact of infrastructure on economic growth and development have established strong relationship between infrastructure and growth from all economic perspectives. The importance of infrastructure sectors viz., construction, roads, telecommunications, IT, energy, manufacturing, engineering and finance, has long been recognised by both developed and developing countries and their leaders and policy-makers. Needless to say, without adequate infrastructure, development of businesses world-wide, globalisation of trade, commerce and industries and world-wide financial transactions would not have been possible. Adequate investment in modern infrastructure is required as infrastructure sets the foundation for economic growth and development.
Though infrastructure is strategically vital for development, yet most of the developing and underdeveloped countries face a chronic lack of infrastructure facilities. Various reports on infrastructure show that one billion people in developing and underdeveloped countries, including two-thirds of the rural population in Africa, don't have access to all-weather roads. Over one and a half billion people, including over 60 per cent of the African population, don't have access to electricity. With globalisation and advent of science and technology, the need for improving infrastructure frameworks, especially in developing countries in Asia and Africa, has become more pressing. This is not only to reduce unemployment and eradicate poverty but also to accelerate production and distribution activities at national and international levels. For proper utilisation of natural resources and endowments, boosting production and climbing up the value-added chain, infrastructure development has no alternative.
Infrastructure and prosperity of the people of a country are very much intertwined. Long-term and medium-term strategic planning is required for infrastructure development to get corroborated benefits from the investments. The US is considered as number one economy in this century. Efficient and effective infrastructure underpins American economic strength to a great extent. The construction of canals, transcontinental railroads, national highways and ports in the 20th century sparked economic growth, development and prosperity of millions of Americans. More recently, massive investments in telecommunication, IT and renewable energy have provided a launching pad for a 21st century economy. Infrastructure drive has powered China's growth remarkably and it has become the world's second largest economy. Economist Simon Rabinovitch wrote: "If you want to know why the Chinese economy has performed so well this year, the eastern city of Nanjinj is a good place to begin with. With round-the-clock work on infrastructure mainly on new subway lines and tens of thousands of homes under construction, it epitomises the investment drive that has allowed China to 7.8 per cent growth in the third quarter."
Some countries in East Asia have made tremendous economic progress by making economic and social infrastructure conducive to economic development and growth. Malaysia, for example, achieved its independence from the British in 1957, made remarkable progress in economic growth and development due to prioritising infrastructure development. Malaysia spent 42.4 per cent of its development budget in 1981-85, 79.3 per cent in 1986-90, 78.3 per cent in 1991-95 and 80.9 per cent in 1996-2000 in infrastructure development. In 2001-05, it reduced investment in infrastructure as the optimum level was achieved. The political, social and economic infrastructure has helped the country in inviting FDI (foreign direct investment) and local investment in high-value added industries. The country now expects to be high-income country by 2020.
Cambodia and Vietnam, the war-torn, politically devastated countries, undertook physical, political and social infrastructure programmes with their own resources and with help of the Asian Development Bank (ADB). Within a short span of time, they became successful and have now become a hub of FDI. The economies are growing rapidly.
Sub-Saharan Africa is one region where infrastructure improvements can spark greater economic development. Many countries there suffer from underdeveloped road and rail systems, rudimentary and unstable electric grids, poor water supply and sanitation systems, and congested ports and airports. "Infrastructure is probably the single-most important need for Africa to develop," said Stephen Hayes, president of the Corporate Council on Africa, a group that promotes US-Africa commercial ties. This group advocates that to attain middle-income levels, Africa must double its investment in infrastructure. African nations at present invest about 2.0 per cent to 3.0 per cent of GDP (gross domestic product) in infrastructure. By contrast, China invests about 9.0 per cent of its GDP in infrastructure projects.
Bangladesh, a highly populated country in the world, should undertake massive and immediate infrastructure development planning for swift economic development and growth. The existing infrastructure of Bangladesh is not suitable for quick industrialisation. Infrastructure like roads, railways, ports, energy, telecommunication, IT, social and sound political system are prerequisites for manufacturing industries, distribution of products, marketing, cost reduction, foreign direct investment. All these contribute directly to economic growth. Electricity is the major source of power for most of the country's economic activities. Bangladesh's installed electric generation capacity was 8,525 MW in 2013, only three-fourth of which is considered to be available for use. Only 40 per cent of the population has access to electricity. Over and above, the country's electricity generation plants have been unable to meet electricity demand over the past decade. Adequate and uninterrupted electricity supply is the most crucial need of the country.
Investments in many sectors are hampered due to shortage of electricity. Industrial sector, real estate and FDI are the worst sufferers. Fiscal support is highly desirable for electricity. Existing budgetary provision of Tk 64.50 billion (in FY 2013-14) is quite insufficient to meet the electricity crisis. Keeping 40 per cent people without electricity facility and 42 per cent population in the queue of 'illiteracy', will simply backslide the policy-makers ambition of making a 'Digital Bangladesh', reducing poverty level to 25 per cent, bringing the country to the status of middle-income country by 2021. The position of Bangladesh in electricity and internet uses in comparison with Brazil, Russia, India, China and South Africa (BRICS countries) is shown below by a chart:
The road sector of Bangladesh is badly structured and is not at all affable for smooth movement of vehicles in cities, towns and highways. In this 21st century, the country still doesn't have any four-lane highways. The narrow and unplanned roads cause huge national losses in the form of wastage of valuable man-hours, wastage of fuels by vehicles on the roads for a long time. The poorly-built roads of the country simply slow down the life-styles of millions of people. These cause injuries and deaths to the people. Injury and death rates from road accidents in Bangladesh are among the highest in the world. Bangladesh has around 0.8 million motorised and 1.8 million non-motorised vehicles, with the former expected to double in the next 10 years. According to police statistics, road traffic crashes cause 45,000 deaths annually, but the unofficial figures are much higher. Even using official figures, road accident fatalities in Bangladesh would be about four times those of India (57 deaths per 10,000 motorised vehicles in Bangladesh versus 13 in India). Congestion, overloading, air pollution, and safety are major problems in Bangladesh's transport sector. Delays in urban areas, especially in Dhaka and main highway corridors, as well as congestion in the Chittagong Port, continue to be major concerns for users that work as a deterrent to economic activity. Appropriate planning and implementation are urgent required to improve the road sector of the country. Building four-track highways can reduce delays and wastage of fuel consumption by commercial vehicles to a great extent.
M Teresa Kho, Country Director of the Asian Development Bank (ADB) in Bangladesh, recently said in a seminar in Dhaka: "Bangladesh has to address infrastructure deficits for higher economic growth. It must grow faster, if poverty is to be completely eradicated in a less than a decade's time. The country has the potential for much higher growth due to advantageous location and availability of a large labour force". The country with large labour force must develop its infrastructure with topmost priority.
Transport, energy, information and communication technology, and water infrastructure enable a country to develop its economy and improve the quality of life of its citizens. Infrastructure acts as the backbone of growth and social well-being, boosting employment, reducing the high costs of accessing markets, providing ways of reaching isolated communities, and ensuring access to basic services. Sound and stable social and political infrastructure is highly essential, in addition to physical infrastructure. It's not worth investing in infrastructure in situations like political instability, weak governance, corrupt administration, economic insecurity, conflicting, confronting, deadly political culture and weak governance. Whatever the people achieve by hard work, by using the limited resources, everything goes waste due to the brittle political culture of the country.
The writer is the Group Financial Controller of a private group of industries. [email protected]
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