Image Courtesy: United States Department of Transportation
The Importance of American Infrastructure to International Competitiveness
There has been a lot of recent interest in revitalizing American infrastructure to enhance international competitiveness with the introduction of the infrastructure bill. An important question that we need to address arises with this bill: what is most pertinent to American competitiveness and should be prioritized? Although the US is one of the wealthiest and most advanced countries in the world, for quality of core infrastructure, we rank 13th globally. Annual public investment in transportation and water infrastructure as a share of total GDP has been on a declining trend since the 1950s, with half a percent of total GDP allocated as of 2018. The current systems in place are antiquated, and rising costs associated with increased delays and maintenance hinder American economic development and our competitive edge.
In the American Society of Civil Engineers (ASCE) 2017 report, the US’s infrastructure averaged a “D+” rating that was attributed in part to the $2.0 trillion 10-year investment gap across all levels of government and the private sector. Compared to other countries, U.S. infrastructure performance suffers due to its overall lower quality. For instance, not only do U.S. passenger trains average half the speed of European high-speed railways, but Americans also have slower internet speed compared to their counterparts.
Despite the clear need for modernization, President Biden’s initial proposal of an ambitious $2 trillion infrastructure plan raised controversy over the possibility of a big corporate tax hike, a global minimum tax, tax on book income, and corporate inversions. The bill plans to allocate large sums to transportation networks, manufacturing, housing, schools, etc. but also incorporates a boost to caregiving services and workforce development.
While issues like caregiving and workforce development are important, they should not detract from the critical necessity of improving traditional and modern American infrastructure.
Addressing water infrastructure and broadband and power infrastructure (revamping energy sites and old mines) is a vital target of the bill. The ASCE’s recent report ultimately finds that closing the water investment gap not only improves public health protection, but yields huge economic benefits. Lack of infrastructure to deliver fast and reliable internet (broadband) has deepened inequities between lower and higher-income communities; the 2020 Federal Communications Report finds some 18 million Americans (primarily living in rural and lower income areas) do not have access to any broadband network. Infrastructure projects in these categories would bring employment opportunities and overall greater productivity. Highlighted as “a once in a generation investment” by President Biden in the initial pitch to Congress, we need to think about creating infrastructure that is going to last and is future oriented.
Sustainably modernizing infrastructure also provides an essential opportunity to address climate change by minimizing resource consumption and energy use. Designing “smart cities” that have enhanced technology systems to improve interconnectivity is key to bolstering urban resilience. A smart “digital twin” city allows adaptation, prediction and monitoring while preparing for future environmental threats through smart building, energy, water and waste management. Several countries have seen the value of local innovation systems in the development of smart cities such as Konza Technology City in Kenya or smart infrastructure design in Jelgava, Latvia. Jelgava’s Operative Information Centre presents an opportunity for strengthened resilience through crisis management and advanced monitoring technology that requires local community engagement. While more broadly implementing a similar design is challenging, designing infrastructure that is more adaptable to new technology and provides greater connectivity is going to best serve long-term American interests.
As of 2019, with a Global Competitiveness Index (GCI) score of 84.8 out of 100, Singapore ranks at the top for its quality of infrastructure, financial system development, labor market functioning, and overall health. Singapore’s Significant Infrastructure Government Loan Act (SINGA) proposed in April this year emphasizes long-term development aims to spread out costs over the generations of people who would be benefiting from the new infrastructure. To avoid burdening future generations, the government is only able to raise up to 90 billion in loans under the proposed law.
Although the American infrastructure bill operates on a much larger scale, modeling after some aspects of the Singa programme as well as smart city designs in other countries through infrastructure could be valuable. To meet our goals of modernization and enhanced preparation for growing environmental threats, we need to be smart with our investments and focus on crucial infrastructure issues. Right now, we need to focus on developing “smart” core infrastructure to as well as water, energy and broadband systems to reshape our economy and meet the pace of international advancement.
