Infrastructure Meaning, Characteristics and Importance

Infrastructure includes the physical structures and networks used to provide essential services to a society. These tangible assets, and the businesses set up to manage them, can be viewed as the backbone of an economy. Due to its importance to a countrys economic and social development, government institutions historically have provided infrastructure. Dictionary meaning 1. An underlying base or foundation especially for an organization or system. 2. The basic facilities, services, and installations needed for the functioning of a community or society, such as transportation and communications systems, water and power lines, and public institutions including schools, post offices, and prisons. Infrastructure can be defined as the basic physical and organizational structures needed for the operation of a society or enterprise r the services and facilities necessary for an economy to function. The term typically refers to the technical structures that support a society, such as roads, water supply, sewers, power grids, telecommunications, and so forth. Viewed functionally, infrastructure facilitates the production of goods and services; for example, roads enable the transport of raw materials to a factory, and also for the distribution of finished products to markets. In some contexts, the term may also include basic social services such as schools and hospitals. The word infrastructure has been used in English since at least 1927 and meant: The installations that form the basis for any operation or system. The word is a combination of the Latin prefix "infra", meaning "below" and "structure". The term came to prominence in the United States in the 1980s following the publication of America in Ruins (Choate and Walter, 1981), which initiated a public-policy discussion of the nations "infrastructure crisis", purported to be caused by decades of inadequate investment and poor maintenance of public works.

That public-policy discussion was hampered by lack of a precise definition for infrastructure. A U.S. National Research Council panel sought to clarify the situation by adopting the term "public works infrastructure", referring to: "...both specific functional modes - highways, streets, roads, and bridges; mass transit; airports and airways; water supply and water resources; wastewater management; solidwaste treatment and disposal; electric power generation and transmission; telecommunications; and hazardous waste management - and the combined system these modal elements comprise. A comprehension of infrastructure spans not only these public works facilities, but also the operating procedures, management practices, and development policies that interact together with societal demand and the physical world to facilitate the transport of people and goods, provision of water for drinking and a variety of other uses, safe disposal of society's waste products, provision of energy where it is needed, and transmission of information within and between communities." In subsequent years, the word has grown in popularity and been applied with increasing generality to cover a wide range of basic facilities required by the directly productive activities of the economy. Various uses of the term Engineering and construction Engineers generally limit the use of the term infrastructure to describe fixed assets that are in the form of a large network. Recent efforts to devise more generic definitions of infrastructure have typically referred to the network aspects of most of the structures and to the accumulated value of investments in the networks as assets. One such effort defines infrastructure as the network of assets "where the system as a whole is intended to be maintained indefinitely at a specified standard of service by the continuing replacement and refurbishment of its components."

Civil defense and economic development Civil defense planners and development economists may use a broad definition that includes public services such as schools and hospitals, emergency services such as police and fire fighting, and basic financial services. Military Military strategists use the term infrastructure to refer to all building and permanent installations necessary for the support of military forces, whether they are stationed in bases, being deployed or engaged in operations, such as barracks, headquarters, airfields, communications facilities, stores of military equipment, port installations, and maintenance stations. Critical infrastructure The term critical infrastructure has been widely adopted to distinguish those infrastructure elements that, if significantly damaged or destroyed, would cause serious disruption of the dependent system or organization. Storm, flood, or earthquake damage leading to loss of certain transportation routes in a city (for example, bridges crossing a river), could make it impossible for people to evacuate and for emergency services to operate; these routes would be deemed critical infrastructure. Similarly, an on-line booking system might be critical infrastructure for an airline. Urban infrastructure Urban or municipal infrastructure refers to systems generally owned and operated by municipalities, such as streets, water distribution, sewers, etc. Related concepts Public works and public services

The term public works includes government owned and operated infrastructure as well as public buildings such as schools and court houses. The term public works generally refers to physical assets needed to deliver public services. Public services include both infrastructure and services generally provided by government. Typical attributes of Infrastructure Infrastructure generally has the following attributes: Capital assets that provide services

They are physical assets that provide services.

Large networks

They are large networks constructed over generations, and are not often replaced as a whole system. The network provides services to a geographically defined area. The system or network has a long life because its service capacity is maintained by continual refurbishment or replacement of components as they wear out.

Historicity and interdependence

The system or network tends to evolve over time as it is continuously modified, improved, enlarged, and as various components are re-built, decommissioned or adapted to other uses.

The system components are interdependent and not usually capable of subdivision or separate disposal, and consequently are not readily disposable within the commercial marketplace.

Natural monopoly

The systems tend to be natural monopolies, insofar that economies of scale means that multiple agencies (in competition with one another) providing a service are less efficient than would be the case if a single agency provided the service.

The assets have a high initial cost and a value that is difficult to determine. Once most of the system is built, the marginal cost of servicing additional clients or users tends to be relatively inexpensive, and may be negligible if there is no need to increase the peak capacity or the geographical extent of the network.

Types of infrastructure Infrastructure systems include both the fixed assets and the control systems and software required to operate, manage and monitor the systems, as well as any accessory buildings, plants or vehicles that are an essential part of the system. Transportation infrastructure

Road and highway networks, including structures (bridges, tunnels, culverts, retaining walls), signage and markings, electrical systems (street lighting and traffic lights) and edge treatments (curbs, sidewalks, landscaping)

Railways, including structures, terminal facilities (railyards, train stations), level crossings, signaling and communications systems Canals and navigable waterways requiring continuous maintenance (dredging, etc.) Seaports and lighthouses Airports, including air navigational systems Mass transit systems (Commuter rail systems, subways, tramways, trolleys and bus terminals) Bicycle paths and pedestrian walkways

Energy infrastructure

Electrical power network, including generation plants, electric grid, substations and local distribution Natural gas pipelines, storage and distribution terminals, as well as the local distribution network Petroleum pipelines, including associated storage and distribution terminals

Water management infrastructure

Drinking water supply, including the system of pipes, pumps, valves, filtration and treatment equipment and meters, including buildings and structures to house the equipment, used for the collection, treatment and distribution of drinking water

Sewage collection and disposal Drainage systems (storm sewers, ditches, etc.) Major irrigation systems (reservoirs, irrigation canals) Major flood control systems (dikes, levee s, major pumping stations and floodgates)

Communications infrastructure

Telephone networks (land lines) including switching systems Mobile phone networks Cable television networks including receiving stations and cable distribution networks Internet backbone, including high-speed data cables, routers and servers as well as the protocols and other basic software required for the system to function Communication satellites Undersea cables Major private, government or dedicated telecommunications networks, such as those used for internal communication and monitoring by major infrastructure companies, by governments, by the military or by emergency services

Pneumatic tube mail distribution networks

Waste management facilities

Solid waste landfills Solid waste incinerators Hazardous waste disposal facilities;

Geophysical monitoring networks

Meteorological monitoring networks Tidal and pluviometric monitoring networks Seismometer networks Remote sensing satellites

Ownership and Financing of Infrastructure Infrastructure may be owned and managed by governments or by private companies, such as public utility or railway companies. Generally, most roads, major ports and airports, water distribution systems and sewage networks are publicly owned, whereas most energy and telecommunications networks are privately owned. Publicly owned infrastructure may be paid for from taxes, tolls or metered user fees, whereas private infrastructure is generally paid for by metered user fees. Major investment projects are generally financed by the issuance of long-term bonds. Note that government owned and operated infrastructure may be developed and operated in the private sector or in public-private partnership in addition to in the public sector. In the United States, public spending on infrastructure has varied between 2.3% and 3.6% of GDP since 1950. Planning and Management of Infrastructure The method of 'Infrastructure Asset Management' is based upon the definition of a Standard of Service (SoS) that describes how an asset will perform in objective and measurable terms. The SoS includes the definition of a minimum condition grade, which is established by considering the consequences of a failure of the infrastructure asset.

The key components of 'Infrastructure Asset Management' are:

Definition of a Standard of Service

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Establishment of measurable specifications of how the asset should perform Establishment of a minimum condition grade

Establishment of a whole-life cost approach to managing the asset Elaboration of an Asset Management Plan

Design and Construction of Infrastructure The design and construction management process usually follows these steps:

Preliminary Studies:
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Determine existing and future traffic loads, determine existing capacity, and estimate the existing and future standards of service; Conduct a preliminary survey and obtain information from existing air photos, maps, plans, etc. Identify possible conflicts with other assets or topographical features; Perform environmental impact studies:

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Evaluate the impact on the human environment (Noise pollution, odors, electromagnetic interference, etc.); Evaluate the impact on the natural environment (disturbance of natural ecosystems); Evaluate possible presence of contaminated soils;

Given various time horizons, standards of service, environmental impacts and conflicts with existing structures or terrain, propose various preliminary designs; Estimate the costs of the various designs, and make recommendations;

Detailed Survey:
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Perform a detailed survey of the construction site; Obtain As Built drawings of existing infrastructure;

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Dig exploratory pits where required to survey underground infrastructure; Perform a geotechnical survey to determine the bearing capacity of soils and rock; Perform soil sampling and testing to estimate nature, degree and extent of soil contamination;

Detailed Engineering:
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Prepare detailed plans and technical specifications; Prepare a detailed bill of materials; Prepare a detailed cost estimate; Establish a general work schedule;

Approval:
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Obtain approval from environmental and other regulatory agencies; Obtain authorization from any owners or operators of assets affected by the work; Inform emergency services, and prepare contingency plans in case of emergencies;

Tendering:
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Prepare administrative clauses and other tendering documents; Organize and announce a Call for Tenders; Answer contractor questions and issue addenda during the tendering process; Receive and analyse tenders, and make a recommendation to the owner;

Construction Supervision:
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Once the construction contract has been signed between the owner and the general contractor, once all approvals have been obtained, and once all preconstruction submittals have been received from the general contractor, the construction supervisor issues an Order to Begin Construction;

Regularly schedule meetings and obtain contact information for the general contractor (GC) and all interested parties; Obtain a detailed work schedule and list of subcontractors from the GC. Obtain detailed traffic diversion and emergency plans from the GC; Obtain proof of certification, insurance and bonds; Examine shop drawings submitted by the GC; Receive reports from the materials quality control lab; When required, review Change requests from the GC, and issue Construction Directives and Change Orders; Follow work progress and authorize partial payments; When substantially completed, inspect the work and prepare a list of deficiencies; Supervise testing and commissioning; Verify that all operating and maintenance manuals, as well as warranties, are complete; Prepare "As Built" drawings; Make a final inspection, issue a certificate of final completion and authorize the final payment.

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Impact on Economic Development Investment in infrastructure is part of the capital accumulation required for economic development. Use as Economic Stimulus During the Great Depression of the 1930s, many governments undertook public works projects in order to create jobs and stimulate the economy. The economist John Maynard Keynes provided a theoretical justification for this policy in his book The General Theory of Employment, Interest and Money, published in 1936. Following the global financial crisis of 20082009, many are again proposing investing in infrastructure

as a means of stimulating the economy (vide the American Recovery and Reinvestment Act of 2009)

ROLE OF INFRASTRUCTURE IN ECONOMIC DEVELOPMENT

Regarded as the economic arteries and veins. Roads, ports, railways, airports, power lines, pipes and wires that enable people, goods, commodities, water, energy and INFORMATION to move about efficiently.

Increasingly, infrastructure is regarded as a crucial source of economic COMPETITIVENESS.

INVESTMENT in infrastructure can yield unusually high returns because it increases peoples choices: of where to live and work, what to consume, what sort of economic activities to carry out, and of other people to communicate with.

Some parts of a countrys infrastructure may be a NATURAL MONOPOLY, such as water pipes. Others, such as traffic lights, may be PUBLIC GOODS. Some may have a NETWORK EFFECT, such as telephone cables. Each of these factors has encouraged GOVERNMENT provision of infrastructure, often with the familiar downsides of state intervention: bad planning, inefficient delivery and CORRUPTION.

Economic and Social Infrastructure play a crucial role in the development of nations, whether developed or still developing. They provide the basic foundation on which the superstructure of development and growth can be erected. Obviously if the foundation is weak and fragile, it is doubtful that any superstructure can be built on it. Such will be a pipe dream.

However, if the foundation is very strong, any structure built on it, simple or super, is likely to provide continuous and stable services for the foreseeable future. Once the economic and social infrastructural foundation is strong, development is not only easily attainable but it is also continuous, stable, quantitative and qualitative. In Rostowian language, a take-off into self- sustaining growth is not only possible but it is also sure and cumulative. The World Development Report 1994 that carried a comprehensive researched write-up report on Infrastructure and its role in economic development says: a 1 percent increase in the stock of infrastructure is associated with a 1 percent increase in the Gross Domestic Product across all countries. And as countries develop, infrastructure must adapt to support changing pattern of demand, as the shares of power, roads, and telecommunications in the total stock of infrastructure increase. As the economy develops, an increasing proportion of the country would need to be opened up by the construction of roads, there would be increased demand for power supply for industrial and domestic consumption, and telecommunications facilities. Studies have therefore found that poor countries record low stock of infrastructure. The association between growth of GDP and of economic infrastructure works both ways. Growth of infrastructure can result from the demand of other sectors; industry will need ports, roads and power supplies, for example. On the other hand, the availability of improved facilities in these areas may stimulate industrial investment. The dual nature of the relationship was set out very clearly by Hirschman (1958) in his classic text on economic development when he discussed the links between what he termed directly productive activity and social overhead capital (essentially public utilities). In his interpretation of the development process unbalanced growth in the form of infrastructure growing ahead of productive activity, or vice versa, is essential to stimulate new investment. Growth arises through maximising the incentive to invest. Although Hirschman himself placed primary emphasis on the follower rather than leader role of infrastructure activity he none the less set out clearly the argument that one of the major roles of infrastructure is to provide inducements to additional investment in other sectors.

Since the infrastructure sector provides profit opportunities to other activities these are externalities or benefits that accrue to others and the generation of such external benefits is often seen as a key aspect of infrastructure development.

THEORETICAL FRAMEWORK: STRATEGIES OF DEVELOPMENT Doctrine of Unbalanced Growth According to the theory of unbalanced growth (UG) by Albert O. Hirschman, no LDC has sufficient endowment of resources as to enable it invest simultaneously in all sectors of the economy in order to achieve balanced growth. Balanced growth is a doctrine previously advanced by Rosenstein-Rodan in his 1943 article on Problems of Industrialisation of Eastern and South-Eastern Europe and developed by Ragnar Nurkse in his important study of Problems Of Capital Formation In Underdeveloped Countries. Developing Rostows leading sector thesis, Hirschman maintains that investments in strategically selected industries or sectors of the economy will lead to new investment opportunities and so pave the way to further economic development. Hirschman identified convergent and divergent series of investments. Convergent series of investments are those projects that appropriate more external economies than they create while divergent series create more external economies than they appropriate. Thus, for development to take place, a deliberate strategy of unbalancing the economy should be adopted. This is possible by investing either in social overhead capital (SOC) or in directly productive activities (DPA). Investment in SOC is advocated not because of its direct effect on final output, but because it permits and in fact invites DPA to come in Some SOC investment is required as a prerequisite of DPA investment. In India, Russia and Nigeria, to mention a few countries, this growth strategy of massive investments in such SOCs as power, irrigation, transport, communications, energy, education and health was pursued.

Role of Economic Infrastructure Economic infrastructure has played a very significantly positive role in the growth performance of countries in recent times. Where development of economic infrastructures has followed a rational, well-coordinated and harmonised path, growth and development has received a big boost. Examples are Korea and Japan. Where the growth of infrastructures has not followed such a rational and coordinated path, growth and development has been stunted. Examples can be found in most African countries and other LDCs. In a paper on Evaluating Investment on Basic Infrastructure in Nigeria, B.E. Aigbokhan gives examples of economic infrastructure as public utilities such as power, telecommunications, piped water supply, sanitation and sewage, solid waste collection and disposal and piped gas as well as public works which include roads, major dam and canal works for irrigation and drainage, and other transport projects like urban and interurban railways, urban transport, seaports and waterways and airports.10 Aigbokan further writes that public infrastructure does three things: (1) it provides services that are part of the consumption bundle of residents; (2) large-scale expenditures for public works increase aggregate demand and provide short-run stimulus to the economy; and (3) it serves as an input into private sector production, thus augmenting output and productivity. Infrastructure enables in reduction in Trade Costs. International experts in trade cost analysis explored recent trends in trade patterns, composition, and transport modes. They also employed a cross-country analysis to highlight the effects of development various transport modes on reducing trade costs. Role of Social Infrastructure Social infrastructure has enormous externalities. Education and health are social

goods in which social marginal productivity (SMP) exceeds private marginal productivity (PMP). Education is a very important source of economic growth as the Denison study shows. Even though education may be a social investment, it is also an economic investment since it enhances the stock of human capital. Health, like education, is a very important argument in the socio-economic production function. A popular adage says that a sound mind usually resides in a healthy body. Health is one of the major determinants of labour productivity and efficiency. Again, since health as a social good provides externalities, large-scale health facilities can only be provided with public resources. Public health deals with the environment in which economic activities take place. If that environment were conducive, it would be permissive of accelerated growth and development. Public health measures include the improvement of environmental sanitation both in rural and urban areas, removal of stagnant and polluted water, slum clearance, better housing, clean water supply, better sewage facilities, control of communicable diseases, provision of medical and health services especially in maternal and child welfare, health education, family planning and above all, for the training of health and medical personnel.17