Role of FDI in Rural Infrastructure Development

The Relation with Their Education & Occupation

Abstract

Infrastructure is critical to economic development. Infrastructure can deliver major benefits in economic growth, poverty alleviation and environment sustainability. A number of studies have argued that generalized access to infrastructure services plays a key role in helping to reduce income inequality. Infrastructure helps poorer people to get connected to core economic activities. Income inequality declines not only with larger investment in infrastructure stocks but also with improved quality of infrastructure services. It helps to raise the income of the poor more than proportionately. Good infrastructure raises productivity and thereby boosts trade; lowers production costs and reduce poverty. The effectiveness of ports, transport and telecommunications networks, the electricity grid and water and drainage systems all impact on commercial activity. Poor infrastructure also contributes to high logistics costs and high inventory levels. This is critical especially when competitiveness is a function of supply chain efficiency. The World Bank’s World Development Report (WDR) of 1994 discussed links, which exist between infrastructure investment and economic growth. It points out that on an average a percentage point increase in infrastructure stock results in proportionate increase in GDP. Infrastructure is also critical in attracting foreign investment and in facilitating projects once the investment has been made. In a 2004 article by the Mckinsey Global Institute. “The truth about foreign direct investment in emerging markets,” executives of multinational companies surveyed cited infrastructure as a primary consideration in making investment decisions abroad.