Build and they’ll come. Economists hate this phrase. They won’t come; they say. Maybe not to the land of the politician who said "Drill baby, drill" and to whom the title of this post owes apologies to. But in most parts of the world, they will indeed come.
Infrastructure development is surely the policy area where most countries have performed poorly in. In developing countries it is because of lack of prioritisation (wasteful subsidies are considered more important) and rampant corruption. In developed countries – it is the NIMBY problem – do it anywhere, but not in my backyard. Everywhere infrastructure has been allowed to dramatically deteriorate (witness America’s airports, Britain’s M25, California’s power cuts, …..) Two stellar exceptions – Britain in the colonies in the early twentieth century and China of today.
That a robust infrastructure is fundamental for economic growth is well known. But I argue here for infrastructure building as a great way of creating jobs.
China has created a huge number of jobs in the construction sector. It cushioned the unemployment caused by the recession primarily because of stepping up infrastructure development to an even higher level. In India, despite the leakages, the National Rural Employment Guarantee Scheme has been successful primarily because of the big jump in road building happening in various parts of the country. China is successfully exporting this concept – it goes around the world scouring for minerals and oil and offers infrastructure development in return, which incidentally also sucks up a fair amount of Chinese labour.
India has a crying need of infrastructure development – both urban and rural. It can safely be depended upon to provide millions of jobs for the next 20 years Bottlenecks such as land acquisition and corruption can be overcome and should not be conveniently explained away as the “price of democracy”. That’s sheer bunk.
Developed countries have allowed their superb infrastructure of 50 years ago to wither away. No country typifies this more than the US. Because any lobby with half a dozen supporters can block anything, America has allowed its infrastructure, especially airports, railroads and power plants, to drop to third world levels. With its high potential for adding jobs, the current economic climate is a great opportunity to correct this aberration.
What about the money ; the sheer size of investment required. Much of this can be recouped by economically pricing the services – tolls on roads, fair price for power, etc etc. Capital is always available if there is a possibility of adequate returns. Its unbelievable that infrastructure investments cannot yield a proper return – after all what competition can there be for an airport or a road or a port ?? The trouble has been mistaken pricing policies for generations which have made infrastructure seem a dead investment.
Build baby, build; for the legions are coming !
Infrastructure development is surely the policy area where most countries have performed poorly in. In developing countries it is because of lack of prioritisation (wasteful subsidies are considered more important) and rampant corruption. In developed countries – it is the NIMBY problem – do it anywhere, but not in my backyard. Everywhere infrastructure has been allowed to dramatically deteriorate (witness America’s airports, Britain’s M25, California’s power cuts, …..) Two stellar exceptions – Britain in the colonies in the early twentieth century and China of today.
That a robust infrastructure is fundamental for economic growth is well known. But I argue here for infrastructure building as a great way of creating jobs.
China has created a huge number of jobs in the construction sector. It cushioned the unemployment caused by the recession primarily because of stepping up infrastructure development to an even higher level. In India, despite the leakages, the National Rural Employment Guarantee Scheme has been successful primarily because of the big jump in road building happening in various parts of the country. China is successfully exporting this concept – it goes around the world scouring for minerals and oil and offers infrastructure development in return, which incidentally also sucks up a fair amount of Chinese labour.
India has a crying need of infrastructure development – both urban and rural. It can safely be depended upon to provide millions of jobs for the next 20 years Bottlenecks such as land acquisition and corruption can be overcome and should not be conveniently explained away as the “price of democracy”. That’s sheer bunk.
Developed countries have allowed their superb infrastructure of 50 years ago to wither away. No country typifies this more than the US. Because any lobby with half a dozen supporters can block anything, America has allowed its infrastructure, especially airports, railroads and power plants, to drop to third world levels. With its high potential for adding jobs, the current economic climate is a great opportunity to correct this aberration.
What about the money ; the sheer size of investment required. Much of this can be recouped by economically pricing the services – tolls on roads, fair price for power, etc etc. Capital is always available if there is a possibility of adequate returns. Its unbelievable that infrastructure investments cannot yield a proper return – after all what competition can there be for an airport or a road or a port ?? The trouble has been mistaken pricing policies for generations which have made infrastructure seem a dead investment.
Build baby, build; for the legions are coming !
