Question

How infrastructure contributes to the economic development of a country? 

Options

• Infrastructure Increases Productivity

• Infrastructure Encourages Investment

• Infrastructure Generates Linkages Production

• All of the above

Answer 1

All of the above

Explanation:

Yes, infrastructure serves as a support system for economic productivity and hence contributes to economic development. The following points will clarify the function of infrastructure in a country's economic development:

1. Infrastructure Increases Productivity:
   Infrastructure, both social and economic, makes production easier. The availability of high-quality infrastructure ensures that production and productivity rise. Infrastructure facilitates the transportation of goods and raw materials, eliminating inefficiencies and promoting efficient resource utilisation and waste elimination.
2. Infrastructure Encourages Investment:
   Infrastructure creates a favorable climate for investment. The abundance of facilities deters investment. For example, in the absence of basic infrastructures such as transportation and communication, an investor will not invest.
3. Infrastructure Generates Linkages in Production:
   Infrastructure encourages economic development through a variety of forwarding and backward linkages. In other words, infrastructure allows one industry to grow as a result of the growth of another through forwarding and backward links. When appropriate infrastructure facilities are available, the process of economic growth becomes dynamic. With the use of a forward linkage, this can be explained. If irrigation facilities, for example, increase agricultural production, allied companies that rely on agriculture for raw materials will also see increased production.
4. Infrastructure Enhances Size of the Market:
   Infrastructure increases the market's size. The bulk movement of raw materials and completed items allows a manufacturer to sell his wares across the country and even internationally.