Detail

Infrastructure is the set of fundamental facilities and systems that support the sustainable functionality of households and firms. Serving a country, city, or other area, including the services and facilities necessary for its economy to function. Infrastructure is composed of public and private physical structures such as roads, railways, bridges, tunnels, water supply, sewers, electrical grids, and telecommunications (including Internet connectivity and broadband access). In general, infrastructure has been defined as "the physical components of interrelated systems providing commodities and services essential to enable, sustain, or enhance societal living conditions" and maintain the surrounding environment.

Applicable to large- and small-scale organizational frameworks, infrastructure includes a variety of systems and structures as long as physical components are required. For example, the electrical grid across a city, state or country is infrastructure based on the equipment involved and the intent to provide a service to the areas it supports.The physical cabling and components making up the data network of a company operating within a specific location are also the infrastructure for the business in question, as they are necessary to support business operations. Because infrastructure often involves the production of either public goods or goods that lend themselves to production by natural monopolies, it is typical to see public financing, control, supervision, or regulation of infrastructure. This usually takes the form of direct government production or production by a closely regulated, legally sanctioned, and often subsidized monopoly.

Infrastructure can also often take on the characteristics of club goods or goods most readily produced by localized monopolies when it comes to much smaller scales. As such, it can be provided within the context of a private company producing infrastructure for use within the firm or provided by localized arrangements of formal or informal collective action.
Sometimes private companies choose to invest in a country's infrastructure development as part of a business expansion effort. For example, an energy company may build pipelines and railways in a country where it wants to refine petroleum. This investment can benefit both the company and the country.Individuals may also choose to fund improvements to certain pieces of public infrastructure. For example, an individual may fund improvements to hospitals, schools, or local law enforcement efforts.

The source of financing for infrastructure varies significantly across sectors. Some sectors are dominated by government spending, others by overseas development aid (ODA), and yet others by private investors.In some places, infrastructure financing districts are established by local governments to pay for physical facilities and services within a specified area by using property tax increases. In order to facilitate investment of the private sector in developing countries' infrastructure markets, it is necessary to design risk-allocation mechanisms more carefully, given the higher risks of their markets.