Four Importance of Infrastructure?
Answers
It is worthwhile to mention some distinctive features of infrastructure – First, the building of infrastructure requires large and lumpy investment and they contribute to output, after a long time that is their gestation period is quite long. Second, due to large overhead capital and lumpy investment, the significant economies of scale are found in most of them. Due to the significant economies of scale found in many infrastructure services, they have the characteristics of natural money. The third important feature of infrastructure facilities is they create externalities.
For example, building of rural roads will benefit agriculture as the farmers are able to sell their products in towns where they can get remunerative prices. Besides, they can get some inputs such as fertilizers, pesticides and other industrial products at relatively cheaper prices as their transport costs decline due to improved transportation. Power plants generate both positive and negative externalities. The construction of power plants produces electricity which is used for industrial helps production and commercial use and thereby helps in acceleration of economic growth. A power plant also produces negative externalities in the form of emission of pollutants, especially CO2.
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