Why Is Infrastructure Important?
29. Infrastructure is important for the services it provides. Infrastructure provides services that support economic growth by increasing the productivity of labour and capital thereby reducing the costs of production and raising profitability, production, income and employment. The focus of the Stocktake is therefore wider than the "hardware" or physical assets associated with infrastructure. Accordingly, this paper includes comments on broad infrastructure policy issues.
30. Infrastructure investment and consumption of infrastructure services have significant implications for achievement of sustainable development objectives, as infrastructure services:
- Encourage new investment across the economy;
- Underpin many aspects of economic and social activity;
- Facilitate the flow of ideas, goods and services;
- Facilitate regional economic growth;4
- Are critical to maintain an inclusive, healthy and productive workforce;
- Involve large scale investment with significant environmental impacts; and
- Generate a range of externalities in their production and consumption.
31. Infrastructure investment can increase productivity by:
- Promoting efficient resource allocation through easier access for labour and materials to particular localities, and allowing alternative activities, employment opportunities and investment to emerge; and
- Providing the necessary economies of scale for urban agglomeration.
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