The Impact of Intelligent Infrastructure Investment on the Well-Being of a Country

Abstract

There is significant debate among scholars and policymakers about the size and role of government. Many governments have responded to economic recession by cutting their expenses to balance their budgets. There are nonetheless some government expenses that are indispensable for a healthy national economy.In this paper we argue that many nations that have achieved basic infrastructure provision need to move to the development of intelligent infrastructures through the use of ICTs. We believe that the impact that these technologies can have on the overall well-being of a nation are now significantly higher than further investment in other infrastructures. We thus want to explore the impact that government expenditure, debt, and economic recession have had on infrastructure investments and the impact that these have on a country’s well-being as measured by the human development index.Fifty years ago it was essential to provide sanitation and water to prevent illnesses that could have deadly consequences. Electricity has been crucial for overall economic activity from manufacturing to retail, and transportation has facilitated and expanded commerce. Information and communication technologies are now capable of supporting the development of intelligent infrastructures that can improve the well-being of a nation, including what scholars have called “beyond GDP” metrics of development. Current infrastructures are, for the most part, dumb; they don’t generate information that could be used to make decisions regarding maintenance, replacement or upgrades. Next generation infrastructures can use sensors and communication networks to provide relevant parties and decision makers with information that can facilitate decision making and potentially reduce operational costs. Highways for example can send information about congestion and road conditions. Electricity grids can provide information about demand, loads, and outages. Water pipes can send alert about unusual levels of usage and breakdowns.Intelligent infrastructures rely on ICTs but governments, under both internal and external pressure to cut costs, may not be making the investments that these intelligent infrastructures require. It is our belief that by reducing investments in intelligent infrastructures they are potentially incurring higher costs in the future and reducing their country’s well-being relative to what it could be if appropriate investments are made.This study uses a two stage statistical analysis of a panel of approximately 170 countries for a period of 10 years to determine how government debt and expenses affect infrastructures including intelligent ones (measured as the interaction between traditional infrastructure and broadband or secure Internet services. We want to identify the types of infrastructure that have the most impact on the human development index and how ICTs and infrastructures can contribute to the well-being of a nation.