Sunday, July 26, 2009

Infrastructure Bottlenecks

The World Bank recently noted the impediments that poor infrastructure is causing to growth in developing countries.

For instance, I have been looking at starting a music festival in a relatively remote region of an ASEAN country I have ties with – but in hosting a festival it's imperative that there be supportive facilities. Are the water, electrical, sanitation and communication systems reliable ? Are the roads relatively easy to travel on ? Rustic doesn’t often work when it comes to large scale productions, of any type. Yet this type of infrastructure can only be built by the state.

In a related way, Doug Henwood notes that, in terms of developing a new growth sector:
where the U.S. is still very competitive internationally—aero-space, airplanes, pharmaceuticals, computers, software, and that sort of thing—all of these things have very deep government involvement. To get some kind of new transformational energy sectors, clean technology is going to require deep government involvement, expenditure of large sums of money.

Growth - especially into new geographic areas, or new industries, requires state support. But a political hostility to taxation, regulation, and public supervision builds within a society dominated by wealthy private interests. This ultimately can undermine the ability of the state to engage in this type of support.


It's interesting to note that developing nations that were formerly 'Communist' are among the most high growth areas in the world today. This is because a strong central government and a nationwide network of infrastructure was developed during the period of 'Communist' rule. Of course, China is the best example of this. It also leads one to wonder if these type of infrastructure requirements can be met in states who do not have a strong central government, or have been under unbroken Western domination.

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