Notesale: Turn your study into money

Document Preview

Extracts from the notes are below, to see the PDF you'll receive please use the links above

---

Infrastructure Development and Economic growth

PROJECT REPORT
A Project submitted to the National Level Paper Presentation

INTRODUCTION
The role of infrastructure in spearheading economic development of a country and
also setting its pace can hardly be over emphasized
...
The economic growth of a country has evidently
happened hand in hand with the development of its infrastructure
...
V
...
R
...
Rao, “the link between infrastructure and development is
not a once for all affair
...

A sound infrastructural foundation is the key to the overall socio-economic
development of a state
...
Availability
of adequate and efficient infrastructural set up not only promotes rapid
industrialization but also improves the quality of life of the people
...
Adequate infrastructure facilities are an absolute
necessity for rapid achievement of sustainable economic growth
...


It has been universally recognized that an adequate supply of infrastructure
services is an essential ingredient for productivity and growth
...


ORIGIN AND MEANING:
The term ‘INFRASTRUCTURE’ seems to have originated in 19th century in
France and till the first half of the 20th Century it was used to refer primarily
to military installation
...
The new era of American
infrastructure started during the great depression of 1929
...
Within the
framework of a newly coined economic theory in macro economics by J
...

Keynes, the new president started with a modest list of infrastructure projects
such as federal administrative buildings
...
The term
infrastructure literally means structure below, i
...
the foundation
...

Infrastructure is generally a set of interconnected structural elements that
provide the framework supporting an entire structure
...
The
term has diverse meanings in different fields, but is perhaps most widely
understood to refer to the fundamental facilities and systems serving a country,
city or area such as transport and communication system, water and power lines,
schools, hospitals etc
...


OBJECTIVES
The objectives of the present study:
 To examine the theoretical framework of infrastructure
...
The present paper provides how infrastructure
impacts growth and development
...


METHODOLOGY
The present study based on the secondary data, collected from the different sources
like World Development Reports of various years, Human Development Report of
India (2011), majority of data and literature collected from the existing growth
theories, empirical studies
...
Why infrastructure is more
important other than the growth determinants and how infrastructure influences the
different sectors of the economy, than it studied the global and Indian experience
of infrastructure and growth through empirical evidences and establish the
relationship between infrastructure and growth
...
Todaro (1981) Emphasis capital
accumulation including all new investments in land, physical equipment and
human resources, results when some proportion of present income is saved and
invested in order to augment future output and income
...
e
...
These directly productive investments
are supplemented by investments in what is often known as social and economic
“Infrastructure” roads, electricity, water, and sanitation, communications etc
...
To sum up all the above economists views on infrastructure in the form
of overhead capital or overhead costs
...
Since Ashauer (1989) around the world
numbers of studies were conducted by the different economists in different time
Spain periods
...
For example during the 1970s, there was a high
correlation between declining productivity in the USA and reductions in
investment on public infrastructure, numerous studies have suggested that
infrastructure investment is likely to augment economic performance
...
EOC is oriented primarily toward
the direct support of productive activities or toward the movement of economic
goods and includes most of the public works projects listed above
...
Other classifications of public infrastructure include investments by the
private sector
...
A
number of interchangeable terms such as, “social overhead”, “overhead capital”
basic economic facilities, etc have been used to denote services which are
generally identified with infrastructure
...
Historical records corroborate
the fact that the countries or regions which have industrialized rapidly had
well developed infrastructure
...
The development
history of all countries clearly tells us that unless the infrastructure is built on
sound lines, it is not possible to achieve rapid
economic development
...
This would also promote global competitive efficiency as a
major thrust area
...
The widening chasm between rural and
urban infrastructure is a core area of development”
...
A
robust economy needs a robust infrastructure
...

Infrastructure development is of two types-demand driven or supply driven
...
On the other hand in the construction of express ways,
which are meant to cater to fast moving traffic and to the requirements of the
industrialists and traders who are willing to pay more for better service, we would
say that their construction is supply driven
...
Demand driven infrastructure is a must for development
whereas supply driven infrastructure is one which is desirable but not a must
...
Infrastructure works directly and indirectly
on a number of determinants of economic development
...
On the supply side also

the development of infrastructure helps in mobilizing potential saving and
channelising them into productive investment
...
Importance of infrastructure
has been generally taken as self evident
...
“The
function of infrastructure is to release latent productivity in the factors of
production singly and in coordination and bring about not only an increase in the
output of individual factors and units of production but also mutually additive
effect through coordination in inputs, output, space and time and thus maximize
the overall rate of economic growth”
...
The
phase at which the economic development takes place depends mainly on the level
of infrastructure
...
In Keynesian macro economic model, the income or output in
the economy derives also from the level of investment made in the economy
...
Though the income in the Keynesian model6 refers to shortterm income, usually measured on annual basis, the investment made also includes
long-term investment such as investment in basic infrastructural facilities
...

The expansion and improvement of the infrastructure is a necessary pre-condition
for capital formation and increase in the production and productivity
...


Economic Infrastructure:
1
...


2
...
Energy/Power:







Coal
Electricity
Wind power
Solar energy
Oil
Gas and Bio-gas

4
...
Increasing productivity of natural resources:
 Reclamation of land
 Irrigation (Major/Medium/Minor)
 Drainage

 Contour building and land reshaping
 Consolidation of holdings
 Fishing boat
 Fishing equipments and refrigeration

6
...
Finance and Banking
 Savings institutions (public private and co-operative sectors)
 Credit and lending institutions
...
Human Resource Development:
 Health
 Clean drinking water
 Public hygiene
 Family Planning
 Medical facilities
 Education, Literacy
 Schools, Colleges and Universities
 Professional Education
 Technical and industrial schools
 Development disciplines
Thus, the scope of infrastructure is growing rapidly over time
...
They differ
from country to country depending on the level of economic development
...


ROLE OF INFRASTRUCTURE IN ECONOMIC
DEVELOPMENT OF INDIA:
1
...

Infrastructure increases the ‘comparative advantage’ of that region in which
infrastructural investment is made
...
The increased
level of production and productivity result in a shift in the supply curve upwards,
which has its positive implications on the price factor depending on the nature of
the elasticity of demand for the commodity under consideration
...


2
...
Private investment will not come up to industry
without proper infrastructure
...
acts as a boost for industrial development
...
Thus, adequate infrastructure increases the
speed of industrial development
...


3
...
Foreign direct investment as well as portfolio investment will flow
to those countries where adequate infrastructure facilities are available
...
Infrastructure Generates Employment Opportunities:
Infrastructure plays a significant role in the generation of employment
opportunities
...

Infrastructure is a base for larger investment, development of industry and
agriculture which in turn creates more employment opportunities
...
Infrastructure Contributes to Tourism Development:
Tourism has emerged as an industry today
...
For proper development of tourism industry, infrastructure development
is very much required
...
For instance many tourist spots in
India remain unnoticed due to lack of infrastructure facilities
...
Infrastructure and National Defence:
Infrastructure development is a must for the defence of the nation
...
increase the strength of the nation from defence
perspective
...
Infrastructure and Social Development:
Infrastructure increases the employment opportunities which in turn increase the
income level of the people
...
Thus, infrastructure development will change the total outlook
of the society and will lead to social development
...
Contributes to Domestic Market Development:
Infrastructural development also contributes to domestic market development
...
The marketing of
agricultural commodities can account for 25-60 per cent of final prices of food
stuffs in developing countries
...
Thus, proper infrastructure can reduce the cost of marketing which in
turn contributes to domestic market development
...


9
...
To a great extent the poor are
identified as those who are unable to consume a minimum amount of clean water
and who live in unhealthy surroundings, consequently, they have more health
problems and fewer employment opportunities
...
Access
to clean water and sanitation has direct consumption benefits in reducing mortality

and morbidity
...
Access to transport
can contribute to higher and more stable incomes enabling the poor to manage risk
...
Improves the Quality of Growth:
Enhancing the quality of growth and thereby life of the people has been the main
focus of development planning in developing countries like India
...


11
...
Lack of infrastructural facilities
in the backward regions, may act as a severe constraint on the development of
these regions
...


12
...
Development of
transport facilities, education, science and technology, growth of towns and cities
etc, may change the very outlook of the people
...
Infrastructure development is
the kingpin of economic development
...
It is undoubtedly a key sector having
pivotal position in the economic development of the country
...
But neither human well- being nor of economic growth is possible
only through the provision of economic infrastructure as well as social
infrastructure
...
By improving the quality of human resources and enhancing
capability, these indicators act as stimulants to growth
...
C
...
Without a strong and viable infrastructure, it is difficult to achieve
rapid and sustained growth of the order of 7 to 8 percent, which is necessary for
progressively eradicating poverty

---