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Infrastructure is basic physical and organizational structures needed for the operation of a society or enterprise or reproductive system , or the services and facilities necessary for an economy to function. It can be generally defined as the set of interconnected structural elements that provide framework supporting an entire structure of development. It is an important term for judging a country or region's development.
The term typically refers to the technical structures that support a society, such as roads, bridges, water supply, sewers, electrical grids, telecommunications, and so forth, and can be defined as "the physical components of interrelated systems providing commodities and services essential to enable, sustain, or enhance societal living conditions."
Viewed functionally, infrastructure facilitates the production of goods and services, and also the distribution of finished products to markets, as well as basic social services such as schools and hospitals; for example, roads enable the transport of raw materials to a factory. In military parlance, the term refers to the buildings and permanent installations necessary for the support, redeployment, and operation of military forces. Research by anthropologists  shows the social importance and multiple ways that infrastructures shape human society and vice versa.
According to the Online Etymology Dictionary, the word infrastructure has been used in English since at least 1927, originally meaning "The installations that form the basis for any operation or system".
Other sources, such as the Oxford English Dictionary, trace the word's origins to earlier usage, originally applied in a military sense. The word was imported from French, where it means subgrade, the native material underneath a constructed pavement or railway. The word is a combination of the Latin prefix "infra", meaning "below", and "structure". The military use of the term achieved currency in the United States after the formation of NATO in the 1940s, and was then adopted by urban planners in its modern civilian sense by 1970.
The term came to prominence in the United States in the 1980s following the publication of America in Ruins, which initiated a public-policy discussion of the nation’s "infrastructure crisis", purported to be caused by decades of inadequate investment and poor maintenance of public works. This crisis discussion has contributed to the increase in infrastructure asset management and maintenance planning in the US.
That public-policy discussion was hampered by lack of a precise definition for infrastructure. A US 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; solid-waste 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 Keynesian economics, the word infrastructure was exclusively used to describe public assets that facilitate production, but not private assets of the same purpose. In post-Keynesian times, however, the word has grown in popularity. It has been applied with increasing generality to suggest the internal framework discernible in any technology system or business organization.
In this article, "hard" infrastructure refers to the large physical networks necessary for the functioning of a modern industrial nation, whereas "soft" infrastructure refers to all the institutions which are required to maintain the economic, health, and cultural and social standards of a country, such as the financial system, the education system, the health care system, the system of government, and law enforcement, as well as emergency services.
The following list of hard infrastructure is limited to capital assets that serve the function of conveyance or channelling of people, vehicles, fluids, energy, or information, and which take the form either of a network or of a critical node used by vehicles, or used for the transmission of electro-magnetic waves.
Infrastructure systems include both the fixed assets, and the control systems, 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. Also included are fleets of vehicles operating according to schedules such as public transit buses and garbage collection, as well as basic energy or communications facilities that are not usually part of a physical network, such as oil refineries, radio, and television broadcasting facilities.
For canals, railroads, highways, airways and pipelines see Grübler (1990), which provides a detailed discussion of the history and importance of these major infrastructures.
Coal mines, oil wells and natural gas wells may be classified as being part of the mining and industrial sector of the economy, not part of infrastructure.
Soft infrastructure includes both physical assets such as highly specialized buildings and equipment, as well as non-physical assets such as the body of rules and regulations governing the various systems, the financing of these systems, as well as the systems and organizations by which highly skilled and specialized professionals are trained, advance in their careers by acquiring experience, and are disciplined if required by professional associations (professional training, accreditation and discipline).
Unlike hard infrastructure, the essence of soft infrastructure is the delivery of specialized services to people. Unlike much of the service sector of the economy, the delivery of those services depend on highly developed systems and large specialised facilities, fleets of specialised vehicles or institutions that share many of the characteristics of hard infrastructure.
Engineers generally limit the use of the term "infrastructure" to describe fixed assets that are in the form of a large network, in other words, "hard" infrastructure. 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 planners and developmental economists generally refer to both hard and soft infrastructure, including public services such as schools and hospitals, emergency services such as police and fire fighting, and basic financial services. The notion of Infrastructure-based development combining long-term infrastructure investments by government agencies at central and regional levels with public private partnerships has proven popular among Asian- notably Singaporean and Chinese, Mainland European and Latin American economists.
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.
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 or municipal infrastructure refers to hard infrastructure systems generally owned and operated by municipalities, such as streets, water distribution, and sewers. It may also include some of the facilities associated with soft infrastructure, such as parks, public pools and libraries.
Green infrastructure is a concept that highlights the importance of the natural environment in decisions about land use planning\. In particular there is an emphasis on the "life support" functions provided by a network of natural ecosystems, with an emphasis on interconnectivity to support long-term sustainability. Examples include clean water and healthy soils, as well as the more anthropocentric functions such as recreation and providing shade and shelter in and around towns and cities. The concept can be extended to apply to the management of stormwater runoff at the local level through the use of natural systems, or engineered systems that mimic natural systems, to treat polluted runoff.
In Marxism, the term infrastructure is sometimes used as a synonym for "base" in the dialectic synthetic pair base and superstructure. However the Marxist notion of base is broader than the non-Marxist use of the term infrastructure, and some soft infrastructure, such as laws, governance, regulations and standards, would be considered by Marxists to be part of the superstructure, not the base.
In other applications, the term infrastructure may refer to information technology, informal and formal channels of communication, software development tools, political and social networks, or beliefs held by members of particular groups. Still underlying these more conceptual uses is the idea that infrastructure provides organizing structure and support for the system or organization it serves, whether it is a city, a nation, a corporation, or a collection of people with common interests. Examples include IT infrastructure, research infrastructure, terrorist infrastructure, and tourism infrastructure.
The term infrastructure is often confused with the following overlapping or related concepts.
The terms land improvement and land development are general terms that in some contexts may include infrastructure, but in the context of a discussion of infrastructure would refer only to smaller scale systems or works that are not included in infrastructure because they are typically limited to a single parcel of land, and are owned and operated by the land owner. For example, an irrigation canal that serves a region or district would be included with infrastructure, but the private irrigation systems on individual land parcels would be considered land improvements, not infrastructure. Service connections to municipal service and public utility networks would also be considered land improvements, not infrastructure.
The term public works includes government owned and operated infrastructure as well as public buildings such as schools and court houses. Public works generally refers to physical assets needed to deliver public services. Public services include both infrastructure and services generally provided by government.
Hard infrastructure generally has the following attributes.
These are physical assets that provide services. The people employed in the hard infrastructure sector generally maintain, monitor, and operate the assets, but do not offer services to the clients or users of the infrastructure. Interactions between workers and clients are generally limited to administrative tasks concerning ordering, scheduling, or billing of services.
These are large networks constructed over generations, and are not often replaced as a whole system. The network provides services to a geographically defined area, and has a long life because its service capacity is maintained by continual refurbishment or replacement of components as they wear out.
The system or network tends to evolve over time as it is continuously modified, improved, enlarged, and as various components are rebuilt, 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. The system interdependency may limit a component life to a lesser period than the expected life of the component itself.
The systems tend to be natural monopolies, insofar that economies of scale means that multiple agencies providing a service are less efficient than would be the case if a single agency provided the service. This is because 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.
In public economics theory, infrastructure assets such as highways and railways tend to be public goods, in that they carry a high degree of non-excludability, where no household can be excluded from using it, and non-rivalry, where no household can reduce another from enjoying it. These properties lead to externality, free ridership, and spillover effects that distort perfect competition and market efficiency. Hence, government becomes the best actor to supply the public goods.
The following concerns mainly hard infrastructure and the specialized facilities used for soft infrastructure.
Infrastructure may be owned and managed by governments or by private companies, such as sole 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.
An interesting comparison between privatization versus government-sponsored public works involves high speed rail (HSR) projects in East Asia. In 1998, the Taiwan government awarded the Taiwan High Speed Rail Corporation, a private organization, to construct the 345 km line from Taipei to Kaohsiung in a 35-year concession contract. Conversely, in 2004 the South Korean government charged the Korean High Speed Rail Construction Authority, a public entity, to construct its high speed rail line, 412 km from Seoul to Busan, in two phases. While different implementation strategies, Taiwan successfully delivered the HSR project in terms of project management (time, cost, and quality), whereas South Korea successfully delivered its HSR project in terms of product success (meeting owners' and users' needs, particularly in ridership). Additionally, South Korea successfully created a technology transfer of high speed rail technology from French engineers, essentially creating an industry of HSR manufacturing capable of exporting knowledge, equipment, and parts worldwide.
Henceforth, government owned and operated infrastructure may be developed and operated in the private sector or in public-private partnerships, 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. Many financial institutions invest in infrastructure.
Most pension funds have long-dated liabilities, with matching long-term investments. These large institutional investors need to protect the long-term value of their investments from inflationary debasement of currency and market fluctuations, and provide recurrent cash flows to pay for retiree benefits in the short-medium term: from that perspective, think-tanks such as the World Pensions Council (WPC) have argued that infrastructure is an ideal asset class that provides tangible advantages such as long duration (facilitating cash flow matching with long-term liabilities), protection against inflation and statistical diversification (low correlation with ‘traditional’ listed assets such as equity and fixed income investments), thus reducing overall portfolio volatility.
Private infrastructure fund is a one of the fastest growing private investment class after Private Equity, Private Debt and Private Real Estate. The importance of private infrastructure fund is gaining traction as developed countries are facing budget deficit and look to private sector for infrastructure financing.
Infrastructure debt is a complex investment category reserved for highly sophisticated institutional investors who can gauge jurisdiction-specific risk parameters, assess a project’s long-term viability, understand transaction risks, conduct due diligence, negotiate (multi)creditors’ agreements, make timely decisions on consents and waivers, and analyze loan performance over time.
Research conducted by the World Pensions Council (WPC) suggests that most UK and European pensions wishing to gain a degree of exposure to infrastructure debt have done so indirectly, through investments made in infrastructure funds managed by specialized Canadian, US and Australian funds.
On November 29, 2011, the British government unveiled an unprecedented plan to encourage large-scale pension investments in new roads, hospitals, airports, etc. across the UK. The plan is aimed at enticing 20 billion pounds ($30.97 billion) of investment in domestic infrastructure projects.
Some experts have warned against the risk of "infrastructure nationalism", insisting that steady investment flows from foreign pension and sovereign funds were key for the long-term success of the asset class- notably in large European jurisdictions such as France and the UK 
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:
Most infrastructure is designed by engineers, urbanists or architects. Generally road and rail transport networks, as well as water and waste management infrastructure are designed by civil engineers, electrical power and lighting networks are designed by power engineers and electrical engineers, and telecommunications, computing and monitoring networks are designed by systems engineers.
In the case of urban infrastructure, the general layout of roads, sidewalks and public places may sometimes be designed by urbanists or architects, although the detailed design will still be performed by civil engineers. If a building is required, it is designed by an architect, and if an industrial or processing plant is required, it may be designed by industrial engineer or a process engineer.
In terms of engineering tasks, the design and construction management process usually follows these steps:
File:BBI 2010-07-23 5.JPG|thumb|right|The Berlin Brandenburg Airport under construction.
Investment in infrastructure is part of the capital accumulation required for economic development and may have an impact on socioeconomic measures of welfare. The causality of infrastructure and economic growth has always been in debate. In developing nations, expansions in electric grids, roadways, and railways show marked growth in economic development. However, the relationship does not remain in advanced nations who witness more and more lower rates of return on such infrastructure investments.
Nevertheless, infrastructure yields indirect benefits through the supply chain, land values, small business growth, consumer sales, and social benefits of community development and access to opportunity. The American Society of Civil Engineers cite the many transformative projects that have shaped the growth of the United States including the Transcontinental Railroad that connected major cities from the Atlantic to Pacific coast; the Panama Canal that revolutionized shipment in connected the two oceans in the Western hemisphere; the Interstate Highway System that spawned the mobility of the masses; and still others that include the Hoover Dam, Trans-Alaskan pipeline, and many bridges (the Golden Gate, Brooklyn, and San Francisco–Oakland Bay Bridge). All these efforts are testimony to the infrastructure and economic development correlation.
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 The General Theory of Employment, Interest and Money, published in 1936. Following the global financial crisis of 2008–2009, some again proposed investing in infrastructure as a means of stimulating the economy (see the American Recovery and Reinvestment Act of 2009).
While infrastructure development may initially be damaging to the natural environment, justifying the need to assess environmental impacts, it may contribute in mitigating the "perfect storm" of environmental and energy sustainability, particularly in the role transportation plays in modern society. Offshore wind power in England and Denmark may cause issues to local ecosystems but are incubators to clean energy technology for the surrounding regions. Ethanol production may overuse available farmland in Brazil but have propelled the country to energy independence. High speed rail may cause noise and wide swathes of rights-of-way through countrysides and urban communities but have helped China, Spain, France, Germany, Japan, and other nations deal with concurrent issues of economic competitiveness, climate change, energy use, and built environment sustainability.
The details of the history concerns mainly hard infrastructure.
Infrastructure before 1700 consisted mainly of roads and canals. Canals were used for transportation or for irrigation. Sea navigation was aided by ports and lighthouses. A few advanced cities had aqueducts that serviced public fountains and baths, while fewer had sewers.
The first paved streets appear to have been built in Ur in 4000 BCE. Corduroy roads were built in Glastonbury, England in 3300 BCE and brick-paved roads were built in the Indus Valley Civilization on the Indian subcontinent from around the same time. In 500 BCE, Darius I the Great started an extensive road system in Persia (Iran), including the Royal Road.
With the rise of the Roman Empire, the Romans built roads using deep roadbeds of crushed stone as an underlying layer to ensure that they kept dry. On the more heavily travelled routes, there were additional layers that included six sided capstones, or pavers, that reduced the dust and reduced the drag from wheels.
The oldest known canals were built in Mesopotamia c. 4000 BCE, in what is now Iraq and Syria. The Indus Valley Civilization in India and Pakistan from c3300 BCE had a sophisticated canal irrigation system. In Egypt, canals date back to at least 2300 BCE, when a canal was built to bypass the cataract on the Nile near Aswan.
In ancient China, large canals for river transport were established as far back as the Warring States (481-221 BCE). By far the longest canal was the Grand Canal of China completed in 609 CE, still the longest canal in the world today at 1,794 kilometres (1,115 mi).
In Europe, canal building began in the Middle Ages because of commercial expansion from the 12th century. Notable canals were the Stecknitz Canal in Germany in 1398, the Briare Canal connecting the Loire and Seine in France in 1642, followed by the Canal du Midi in 1683 connecting the Atlantic to the Mediterranean. Canal building progressed steadily in Germany in the 17th and 18th centuries with three great rivers, the Elbe, Oder, and Weser being linked by canals.
As traffic levels increased in England and roads deteriorated, toll roads were built by Turnpike Trusts, especially between 1730–1770. Turnpikes were also later built in the United States. They were usually built by private companies under a government franchise.
Water transport on rivers and canals carried many farm goods from the US frontier between the Appalachian Mountains and Mississippi River in the early 19th century, but the shorter road route over the mountains had advantages.
In France, Pierre-Marie-Jérôme Trésaguet is widely credited with establishing the first scientific approach to road building about the year 1764. It involved a layer of large rocks, covered by a layer of smaller gravel. John Loudon McAdam (1756–1836) designed the first modern highways, and developed an inexpensive paving material of soil and stone aggregate known as macadam.
In Europe, particularly Britain and Ireland, and then in the early US and the Canadian colonies, inland canals preceded the development of railroads during the earliest phase of the Industrial Revolution. In Britain between 1760 and 1820 over one hundred canals were built.
In the United States, navigable canals reached into isolated areas and brought them in touch with the world beyond. By 1825 the Erie Canal, 363 miles (584 km) long with 82 locks, opened up a connection from the populated northeast to the fertile Great Plains. During the 19th century, the length of canals grew from 100 miles (160 km) to over 4,000 miles (6,400 km), with a complex network in conjunction with Canada making the Great Lakes navigable, although some canals were later drained and used as railroad rights-of-way.
The earliest railways were used in mines or to bypass waterfalls, and were pulled by horses or by people. In 1811 John Blenkinsop designed the first successful and practical railway locomotive, and a line was built connecting the Middleton Colliery to Leeds. The Liverpool and Manchester Railway, considered to be the world's first intercity line, opened in 1826. In the following years, railways spread throughout the United Kingdom and the world, and became the dominant means of land transport for nearly a century.
In the US, the 1826 Granite Railway in Massachusetts was the first commercial railroad to evolve through continuous operations into a common carrier. The Baltimore and Ohio, opened in 1830, was the first to evolve into a major system. In 1869, the symbolically important transcontinental railroad was completed in the US with the driving of a golden spike at Promontory, Utah.
The electrical telegraph was first successfully demonstrated on 25 July 1837 between Euston and Camden Town in London. It entered commercial use on the Great Western Railway over the 13 miles (21 km) from Paddington station to West Drayton on 9 April 1839.
In the United States, the telegraph was developed by Samuel Morse and Alfred Vail. On 24 May 1844, Morse made the first public demonstration of his telegraph by sending a message from the Supreme Court Chamber in the US Capitol in Washington, DC to the B&O Railroad outer depot (now the B&O Railroad Museum) in Baltimore. The Morse/Vail telegraph was quickly deployed in the following two decades. On 24 October 1861, the first transcontinental telegraph system was established.
The first successful transatlantic telegraph cable was completed on 27 July 1866, allowing transatlantic telegraph communications for the first time. Within 29 years of its first installation at Euston Station, the telegraph network crossed the oceans to every continent but Antarctica, making instant global communication possible for the first time.
Tar-bound macadam, or tarmac, was applied to macadam roads towards the end of the 19th century in cities such as Paris. In the early 20th century tarmac and concrete paving were extended into the countryside.
In 1876, Alexander Graham Bell achieved the first successful telephone transmission of clear speech. The first telephones had no network, but were in private use, wired together in pairs. Users who wanted to talk to different people had as many telephones as necessary for the purpose. A user who wished to speak, whistled into the transmitter until the other party heard. Soon, however, a bell was added for signalling, and then a switch-hook, and telephones took advantage of the exchange principle already employed in telegraph networks. Each telephone was wired to a local telephone exchange, and the exchanges were wired together with trunks. Networks were connected together in a hierarchical manner until they spanned cities, countries, continents, and oceans.
At the Paris Exposition of 1878, electric arc lighting had been installed along the Avenue de l'Opera and the Place de l'Opera, using electric Yablochkov arc lamps, powered by Zénobe Gramme alternating current dynamos.
Yablochkov candles required high voltages, and it was not long before experimenters reported that the arc lights could be powered on a seven mile (11 km) circuit. Within a decade scores of cities would have lighting systems using a central power plant that provided electricity to multiple customers via electrical transmission lines. These systems were in direct competition with the dominant gaslight utilities of the period.
The first electricity system supplying incandescent lights was built by the Edison Illuminating Company in lower Manhattan, eventually serving one square mile with six "jumbo dynamos" housed at Pearl Street Station.
The first transmission of three-phase alternating current using high voltage took place in 1891 during the International Electro-Technical Exhibition in Frankfurt. A 25 kilovolt transmission line, approximately 175 km (109 mi) long, connected Lauffen on the Neckar with Frankfurt. Voltages used for electric power transmission increased throughout the 20th century. By 1914 fifty-five transmission systems operating at more than 70,000 V were in service, the highest voltage then being used was 150,000 V.
In the 19th century major treatment works were built in London in response to cholera threats. The Metropolis Water Act (1852) was enacted. "Under the Act, it became unlawful for any water company to extract water for domestic use from the tidal reaches of the Thames after 31 August 1855, and from 31 December 1855 all such water was required to be effectively filtered. The Metropolitan Commission of Sewers was formed, water filtration was made compulsory, and new water intakes on the Thames were established above Teddington Lock.
The technique of purification of drinking water by use of compressed liquefied chlorine gas was developed in 1910 by US Army Major Carl Rogers Darnall, Professor of Chemistry at the Army Medical School. Darnall's work became the basis for present day systems of municipal water purification.
In 1863 the London Underground was created. In 1890, it first started using electric traction and deep-level tunnels. Soon afterwards, Budapest and many other cities started using subway systems. By 1940, nineteen subway systems were in use.
In 1925, Italy was the first country to build a freeway-like road, which linked Milan to Como, known as the Autostrada dei Laghi. In Germany, the autobahns formed the first limited-access, high-speed road network in the world, with the first section from Frankfurt am Main to Darmstadt opening in 1935. The first long-distance rural freeway in the United States is generally considered to be the Pennsylvania Turnpike, which opened on October 1, 1940. In the United States, the Interstate Highway System was authorized by the Federal-Aid Highway Act of 1956. Most of the system was completed between 1960 and 1990.
Research into packet switching started in the early 1960s. The ARPANET in particular led to the development of protocols for internetworking, where multiple separate networks could be joined together into a network of networks The first two nodes of what would become the ARPANET were interconnected on 29 October 1969. Access to the ARPANET was expanded in 1981 when the National Science Foundation (NSF) developed the Computer Science Network (CSNET). In 1982, the Internet Protocol Suite (TCP/IP) was standardized and the concept of a world-wide network of fully interconnected TCP/IP networks called the Internet was introduced. TCP/IP network access expanded again in 1986 when the National Science Foundation Network (NSFNET) provided access to supercomputer sites in the United States from research and education organizations. Commercial internet service providers (ISPs) began to emerge in the late 1980s and early 1990s. The ARPANET was decommissioned in 1990. The Internet was commercialized in 1995 when NSFNET was decommissioned, removing the last restrictions on the use of the Internet to carry commercial traffic. The Internet started a rapid expansion to Europe and Australia in the mid to late 1980s and to Asia in the late 1980s and early 1990s. During the late 1990s, it was estimated that traffic on the public Internet grew by 100 percent per year, while the mean annual growth in the number of Internet users was thought to be between 20% and 50%. As of 31 March 2011, the estimated total number of Internet users was 2.095 billion (30.2% of world population).
According to researchers at the Overseas Development Institute, the lack of infrastructure in many developing countries represents one of the most significant limitations to economic growth and achievement of the Millennium Development Goals (MDGs). Infrastructure investments and maintenance can be very expensive, especially in such as areas as landlocked, rural and sparsely populated countries in Africa. It has been argued that infrastructure investments contributed to more than half of Africa's improved growth performance between 1990 and 2005, and increased investment is necessary to maintain growth and tackle poverty. The returns to investment in infrastructure are very significant, with on average thirty to forty percent returns for telecommunications (ICT) investments, over forty percent for electricity generation, and eighty percent for roads.
The demand for infrastructure, both by consumers and by companies is much higher than the amount invested. There are severe constraints on the supply side of the provision of infrastructure in Asia. The infrastructure financing gap between what is invested in Asia-Pacific (around US$48 billion) and what is needed (US$228 billion) is around US$180 billion every year.
In Latin America, three percent of GDP (around US$71 billion) would need to be invested in infrastructure in order to satisfy demand, yet in 2005, for example, only around two percent was invested leaving a financing gap of approximately US$24 billion.
In Africa, in order to reach the seven percent annual growth calculated to be required to meet the MDGs by 2015 would require infrastructure investments of about fifteen percent of GDP, or around US$93 billion a year. In fragile states, over thirty-seven percent of GDP would be required.
Currently, the source of financing varies significantly across sectors. Some sectors are dominated by government spending, others by overseas development aid (ODA), and yet others by private investors.
In sub-Saharan Africa, the government spends around US$9.4 billion out of a total of US$24.9 billion. In irrigation, governments represent almost all spending. In transport and energy a majority of investment is government spending. In ICT and water supply and sanitation, the private sector represents the majority of capital expenditure. Overall, between them aid, the private sector, and non-OECD financiers exceed government spending. The private sector spending alone equals state capital expenditure, though the majority is focused on ICT infrastructure investments. External financing increased in the 2000s (decade) and in Africa alone external infrastructure investments increased from US$7 billion in 2002 to US$27 billion in 2009. China, in particular, has emerged as an important investor.
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