(d) Lack of expertise may lead to inefficiency and a co-ordination failure. Sometimes as new needs emerge, there is an over-investment in new equipment due to
many persons hoping to set a foothold in the market without referring to what
others are doing. While there is often an excessive number of computer or
smartphone shops, it also happens that many farmers will plant the same crop
at the same time, with a resulting glut in the market.
It is probably worth stressing one or two special issues:
Capital, (loans or otherwise) is an important parameter in economic development.
Although thought of as charging high commissions (see also Shute (2009))
financiers provide services needed by society. There is no short-cut to free
money. As a small scale saver, households like to receive interest on their bank
savings. If the bank lends this money to large scale investors, the bank will
necessarily add the minimum rate preferred by the households to its own commission. The lower the rate the households accept, the lower can be the lending
rate to business investors. This is what is often called the cost of money: at which
rate can the investor borrow money?
Government may sometimes intervene by legislating on low interest rates for
special purposes (as incentives to investors), but it would be a mistake to believe
that this is the “correct” rate, because, in fact, the government is just subsidising
the cost of money for a special purpose.
Producers, can only produce the right product at a convenient price if they understand and know the market conditions. Otherwise, they may end producing
unwanted goods at no big value to them. For example, farmers should produce
vegetables, at the right dates, of the right quality, preferably avoiding gluts, or low
market prices will result. If they have to pay for commercial and financial
services, they should enquire what they are obtaining in exchange. Getting a
proper organisation is probably the most difficult issue because a first class
co-operation and team work is required for efficient commercial work, the more
so as economic development proceeds and the country’s economy becomes more
complex.
1.4 Why Do We Need Infrastructure?
1.4.1 Economic Infrastructure
Economic development requires that measures capable of exerting favourable effects
on the flow of income should be taken in public services. Generically, economic
infrastructure has the following distinct components:
(a) energy (electricity, coal, petroleum and natural gas, renewable energy sources
and atomic power for civil use),
(b) transport (roads, railways, shipping, ports and airports),
(c) telecommunications and information technology,
1.4 Why Do We Need Infrastructure?
29
many persons hoping to set a foothold in the market without referring to what
others are doing. While there is often an excessive number of computer or
smartphone shops, it also happens that many farmers will plant the same crop
at the same time, with a resulting glut in the market.
It is probably worth stressing one or two special issues:
Capital, (loans or otherwise) is an important parameter in economic development.
Although thought of as charging high commissions (see also Shute (2009))
financiers provide services needed by society. There is no short-cut to free
money. As a small scale saver, households like to receive interest on their bank
savings. If the bank lends this money to large scale investors, the bank will
necessarily add the minimum rate preferred by the households to its own commission. The lower the rate the households accept, the lower can be the lending
rate to business investors. This is what is often called the cost of money: at which
rate can the investor borrow money?
Government may sometimes intervene by legislating on low interest rates for
special purposes (as incentives to investors), but it would be a mistake to believe
that this is the “correct” rate, because, in fact, the government is just subsidising
the cost of money for a special purpose.
Producers, can only produce the right product at a convenient price if they understand and know the market conditions. Otherwise, they may end producing
unwanted goods at no big value to them. For example, farmers should produce
vegetables, at the right dates, of the right quality, preferably avoiding gluts, or low
market prices will result. If they have to pay for commercial and financial
services, they should enquire what they are obtaining in exchange. Getting a
proper organisation is probably the most difficult issue because a first class
co-operation and team work is required for efficient commercial work, the more
so as economic development proceeds and the country’s economy becomes more
complex.
1.4 Why Do We Need Infrastructure?
1.4.1 Economic Infrastructure
Economic development requires that measures capable of exerting favourable effects
on the flow of income should be taken in public services. Generically, economic
infrastructure has the following distinct components:
(a) energy (electricity, coal, petroleum and natural gas, renewable energy sources
and atomic power for civil use),
(b) transport (roads, railways, shipping, ports and airports),
(c) telecommunications and information technology,
1.4 Why Do We Need Infrastructure?
29