Benefits of Public Infrastructure Projects

Infrastructure is the backbone of each thriving economy. That is why public infrastructure projects are very important to an economy that envisions creating wealth. Financial crises do not cease to rock most economies because of inadequate public infrastructure spending. Federal and state governments should realize the need to inject funds in the economy in the form of public infrastructure projects as this is a major monetary policy of steering the economy to further heights of development. Here are a few benefits of these projects.

Infrastructure Project

· Rise of the Gross Domestic Product (GDP). Public infrastructure projects lead to rise of a country’s GDP because all the money spent during the projects is recovered through tax revenue. That is why most governments start these projects when they want to stabilize the economy in the long run. The projects create jobs now and in the future and create opportunities for businesses that never existed before.

· High Return On Investment (ROI) in the long run. You can view public infrastructure projects as investment projects for the government. The government borrows money from the International Monetary Fund or elsewhere to run these projects. At the end of the day, the government is able to repay the money it borrowed plus the interest, because the return on investment is high. Government finances over time increases in each sector and the discounted present value of the Gross Domestic Product per dollar spending rises.

· Improvement of private sector investment. Public infrastructure projects also open several opportunities for private investors. The private sector need as much attention as the public sector as it highly contributes to the economy of a state. Completed public infrastructure projects support private businesses which in turn creates jobs, improves the GDP and generally improves the economic status of a state.

· Rise of real wages. As public infrastructure projects are being done, employees of such projects are paid, they are able to support their families and can get involved in private businesses as well. This has the ballooning effect of rising the standards of living for the citizens and the economy remains healthy over the long time.

· Improvement of business performance in international markets. Countries and states with several state-of-the-art public infrastructure projects tend to be very active in international trade because their businesses are productive and competitive in international markets. Investment-led economic expansions are many in such countries and businesses thrive in international markets. Take the example of a country that invests in a standard Gauge railway or a port. The businesses in this country will participate in export and import businesses easier than their counterparts in less developed countries.

Indeed, though the benefits of public infrastructure projects are not clear-cut especially in the short-run, they are very essential in the long run. They have actually made the difference between developed countries and developing countries. All the developed countries have completed well-developed infrastructure projects and they are helping the developing countries by funding public infrastructure projects in such countries. These are indeed projects that should not be ignored.