Poor infrastructure Flashcards
Introduction
Introduction: Infrastructure is the collective name for all the communication links and basic utility links that get built across a country to facilitate movements. For example, roads, ports, airports and the provision of high speed Internet services. Good infrastructure requires high levels of capital input, expertise, and political will.
Three points
Restricts competitiveness in international markets
Inhibits Foreign Direct Investment
Inhibits Skills and Education
Other points could include:
• Limiting the opportunities for tourism
• Might encourage unequal regional development
Competitiveness point
Restricts competitiveness in international markets: With weaker transport and communication links, production and distribution of goods and services is slower and less efficient. This increases costs of production, leading to reduced international competitiveness. This could lead to reduced income from exports, which could limit the availability of foreign currency, leading to reduced ability to buy foreign capital. In the long term this could constrain development.
Competitiveness evaluation
Evaluation: Differentials in the cost of labour and other factors of production between LEDCs and MEDCs might counter any increased costs of production caused by the inadequacies of the transport and communication infrastructure. However their relative competitiveness in the global markets might therefore be more dependent upon their relative cost of production with other LEDCs. Therefore the failure to have developed infrastructure as much as a competing LEDC may be detrimental.
FDI point
Inhibits Foreign Direct Investment: A lack of transport and communications infrastructure could make a country less attractive for a foreign firm to invest in a country. This investment could take the form of purchase of shares, building a factory, or taking over a company within the LEDC. This potential loss of FDI could prove detrimental for development because foreign firms bring finance, employment, training and education, management know-how ad potential tax revenue with them.
FDI evaluation
Evaluation: However a loss of FDI is not always problematic for the host country. Often the advantages of this investment is exaggerated. For example, whilst FDI can lead to increased employment, it is often fairly low level, low skilled jobs that are made for workers within the host country. Often management opportunities are only available to nationals from the FDI’s country of original.
Skills and education point
Inhibits Skills and Education: A lack of infrastructure can inhibit the development of skills and education. Poor transport links (especially in more rural areas) can reduce school attendance. Limited access to Internet services can also limit the opportunities for distance learning. Outside the formal academic environment this lack of Internet can also lead to a constraint on sharing best practice and new developments in the understanding of for example agricultural techniques, or following market trends.
Skills and education evaluation
Evaluation: This constraint on development may be less of a problem in the future. Improvements in mobile technology and wireless Internet access, along with a falling cost in Internet infrastructure is resulting in significant development in these technologies in the developing world. The input from external global agencies (such as ICANN) is also leading to fast paced improvements in these areas.
