Putting chaos in order

Increasingly it is being acknowledged that the path to economic growth and development lies in the provision of quality infrastructural services.  Providing infrastructural services to meet the demands of businesses, households, and other users is one of the major challenges of economic development. Infrastructure so defined includes public utilities: power, piped gas, telecommunications, water supply, sanitation and sewerage, solid waste collection and disposal, public works, major dam and canal works for irrigation, roads and other transport sectors (railways, urban transport, ports and waterways, and airports). This article is the first of a series which will look at the issue of infrastructure and development in relation to Trinidad and Tobago and  in the context of the World Bank Report on “Infrastructure For Development” published in 1994 fully ten years ago but which remains very relevant.

Lights out 

The adequacy of infrastructure helps determine the success and failure of countries in diversifying production, expanding trade, coping with population growth, reducing poverty and improving environmental conditions. Quality infrastructure raises productivity and lowers production costs, but must be expanded at a pace which accommodates growth. The precise linkages between infrastructure and development are still open to debate but as countries develop, the level of infrastructure must support changing patterns of demand. The evidence is that a strong association exists between per capita GDP and the availability of certain infrastructure, particularly telecommunications, power, paved roads, and access to safe water.

The World Bank Report asserts that the valuing of infrastructure stocks indicates that their composition changes significantly as incomes rise. For low-income countries, more basic infrastructure is important such as water, irrigation, and, to a lesser extent, transport. As economies mature into the middle-income stage, most of the basic consumption demands for water are met, the share of agriculture in the economy shrinks, and more transport infrastructure is provided. While Trinidad and Tobago is ranked as a middle- income country, the water supply situation has still not been solved because there are several areas that do not receive a regular supply. The costs incurred by households in storing water would be an interesting statistic to be factored into the overall cost of the water supply service. In terms of transport infrastructure, the country is at the stage of expanding the existing highway network by adding capacity as well as constructing new roads.

Watch the money

The evidence from other countries is that, while the road network is important to the transport system, it is even more critical to provide mass transit systems and to institute traffic management procedures to regulate private vehicles. Failure in this regard merely results in the newly built roads reaching capacity in a short time. The share of power and telecommunications in investment and infrastructure stocks becomes even greater in high-income countries and with the income derived from the natural resources available to Trinidad and Tobago, this is the direction that should be taken. The relationships between infrastructure and development suggest that infrastructure has a high potential payoff in terms of economic growth, but do not provide a basis for prescribing the appropriate levels nor sectoral allocations, for infrastructure investment.

Further World Bank evidence confirms that investment in infrastructure alone does not guarantee growth, perhaps because any disparities may be due to differences in the efficiency of investment across countries and over time. Infrastructure spending cannot, therefore, overcome a weak climate for economic activity. Coping with infrastructure’s challenges involves tackling inefficiency and waste both in investment and in delivering services.

Who needs to focus? 

The challenge faced by Trinidad and Tobago is to refocus on improving the quality of infrastructural services rather than the quantity of infrastructure stocks because the present quality does not reflect the expenditure incurred over the past 25 years. Infrastructure is a necessary, although not sufficient, precondition for growth — adequate complements of other resources must be present as well. The growth impact of infrastructure investments also depends on the timing and location of additions to capacity, and on the existing imbalance between supply and demand. Because much infrastructure consists of networks, relieving bottlenecks at certain points of the system can produce very high returns. Further, the issue of inadequate maintenance is a feature of  underdevelopment which is typified in Trinidad and Tobago by the condition of the road infrastructure.

A well maintained road surface should last 10 to 15 years before resurfacing is necessary but lack of maintenance can lead to deterioration in half that time. In other areas of infrastructure where maintenance was substandard, studies have shown that power systems supply 60% of generating capacity rather than 80% and water supply averages 70% delivery of output as opposed to 85% as best practices dictate. In Trinidad and Tobago we continue to resurface roads based on community protest rather than on a systematic planning basis although there has been improvement in this area of activity. However, the water delivery system continues to be flawed with huge losses being incurred through leaks in water mains and in buildings. Very expensive water is literally going down the drain.

The views expressed in this column are not necessarily those of Guardian Life. You are invited to send your comments to guardianlife@ghl.co.tt