Infrastructure: why investments became such a big problem

Last year Internet websites started publishing more and more information outlining the problems of investments concerning infrastructures. Local investments are compared with national ones only to find out an interesting picture. In developed countries the state governments are significantly reducing finances spent onto the roads and other infrastructural facilities. In the meantime, this responsibility lies on the shoulders of local authorities.

Roads untraveled

The first who kicked up a row became American reporters. They have figured out that roads and bridges in the USA are in the dire state. Then, it seems that nobody is going to deal with that.

For instance, several years ago, particularly, in 2013 the report of civil building claimed that it will have taken nearly $1.6 trillion by the end of 2020 in case one wants to keep the infrastructure of the USA in a proper order.

The situation becomes worse in the light of World Economic Forum rankings. It appeared that American roads that obtained the seventh position in the world for many years dropped down to the fourteenth place.

Afterwards, the states decided to solve the problems raising tax to the fuel. At least twelve regions have already done that. It gave to the local authorities a possibility to invest more money in the infrastructure. However, it does not waive responsibility from the government which investments are not enough even to keep the infrastructure at the level it used to be.

One more problem should be outlined. The local taxes are said to be defined in the nominal terms, and it leads to disappearance of their cost because of inflation.

Is it really important to invest?

International Monetary Fund has published a report where it is quite visible that investments into infrastructure encourage additional growth of manufacture by 0.4% during the first year and by 1.5% in the course of next four years.

What makes sponsors be scared of possible risks is the number of built railway stations that are simply empty. The stated problem is inherent to Spain, Cihna, France and Germany.

Still, those who are afraid of wrong choice when it takes to investment into infrastructure should know that help of project finance advisory specialists who combine accounting and risk analysis skills who are able to lead to success.

If one is still hesitating, we are going to publish the following figures that prove that infrastructural development is the inevitable process of any economic benefits in the world. Particularly, in the time period from 2003 to 2012 the length of railroads increased by 13 thousand kilometers while in Japan similar indicator went up to 1.5 thousand kilometers.

How to get benefits

Moreover, there is connection between the developed infrastructure and profit received from the tourists.

For instance, the project of high-flying highway Millau Viaduct at the south of France was the victim of skepticism at the stage of idea creation. The critics considered that investments in €350 millions will not cover the expenses while nature could be susceptible to damage. However, the complicated technical building after coming to operation began bringing an annual profit in €50-100 millions.

Even though it is quite difficult to estimate the total economic effect taken from the investments, in many cases such financial contributions do a favor to the tourist business of the country. In the same France the infrastructure made a crucial influence on the development of economics, and it became a key to success.

One more conclusion which is usually drawn by the experts is that the role of government in such infrastructures should not be underestimated.

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