Infrastructure and economic development go hand-in-hand. Infrastructure contributes to the economic development of a country in the following ways
(i) Increasing Productivity Social infrastructure such as housing, health and education makes living conditions belter for the population. Healthy and educated population is a source of human capital formation which results in greater productivity and more output leading to creation of better economic infrastructure with the given resources.
(ii) Boosting Production Infrastructure boosts production both by increasing the productivity of the factors of production and by providing supportive facilities. Agricultural production depends largely on the adequate expansion and development of irrigation facilities and power supply needed for the same. Industrial production increase depends on the development of power and electricity generation, transport and communications.
(iii) Inducing Investment Economic infrastructure facilitates production and increases income in the economy. Business environment in the economy becomes conducive and this induces more investment which leads to employment generation leading to higher income and better standard of living.
(iv) Quality of Life Infrastructure facilities such as transport, communication and power supply make life easier for people and increase their access to other related facilities such as education and health. This makes people more productive.
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