DEFINITION of 'Infrastructure'

The basic physical systems of a business or nation. Transportation, communication, sewage, water and electric systems are all examples of infrastructure. These systems tend to be high-cost investments, however, they are vital to a country's economic development and prosperity. Infrastructure projects may be funded publicly, privately or through public-private partnerships.


Loading the player...

BREAKING DOWN 'Infrastructure'

Sometimes private companies will choose to invest in a country's infrastructure development as part of a business expansion effort. For example, an energy company might build pipelines and railways in a country where it wants to refine petroleum. This investment can benefit both the company and the country.

Infrastructure is also an asset class that tends to be less volatile than equities over the long term and generally provides a higher yield. As a result, some companies and individuals like to invest in infrastructure for its defensive characteristics. Individuals and institutions can invest in infrastructure through infrastructure funds and can even choose specialized funds, such as those that invest in transportation infrastructure or water infrastructure.

  1. Economies Of Scale

    Economies of scale is the cost advantage that arises with increased ...
  2. Development Economics

    A branch of economics that focuses on improving the economies ...
  3. Planned Urban Development - PUD

    A type of community zoning classification that is planned and ...
  4. Build-Operate-Transfer Contract

    A type of arrangement in which the private sector builds an infrastructure ...
  5. Project Finance

    Defined by the International Project Finance Association (IPFA) ...
  6. Investment

    An asset or item that is purchased with the hope that it will ...
Related Articles
  1. Retirement

    4 Reasons Why Americans Retire in Costa Rica

    Understand why more and more Americans are deciding to retire in developing countries. Learn about the top five reasons why Americans retire to Costa Rica.
  2. Retirement

    4 Reasons Why Americans Retire in the Dominican Republic

    Understand why many Americans are deciding to retire internationally. Learn about the top four reasons why Americans are retiring to the Dominican Republic.
  3. Retirement

    6 Reasons Why Americans Retire in Panama

    Understand why more and more Americans are retiring to Latin America. Learn why Panama is a popular retirement destination for Americans.
  4. Retirement

    4 Reasons Why Americans Retire in Colombia

    Learn about the top four reasons why Americans are retiring to Colombia.
  5. Economics

    The 8 Industries Driving New Jersey's Economy

    Learn which eight industries are driving New Jersey's economy. See which sectors employ the most people and which industries are expected to grow the fastest.
  6. Economics

    2 Countries That Are Friends With North Korea

    Learn about the few international allies of North Korea and the reasons the country is largely politically isolated from the rest of the world.
  7. Active Trading Fundamentals

    The 3 Reasons Why Chinese Invest in Africa

    Learn about the increasing level of foreign direct investment by China in Africa, and understand the major reasons for China's African investments.
  8. Stock Analysis

    Top Stocks to Get into Iron Ore Mining

    Learn about the two best stocks to get into iron ore mining. Iron ore is a cyclical industry so the balance sheet is an important concern.
  9. Economics

    What Does Infrastructure Mean?

    Examples of infrastructure include mass transit, communication, sewage, water and electric systems, plus roads, bridges and tunnels.
  10. Personal Finance

    A Career In Real Estate Portfolio Management

    Find out why this job more closely resembles the role of a CEO than an asset manager.
  1. Is Japan an emerging market economy?

    Japan is not an emerging market economy. Emerging market economies are characterized by low per capita incomes, poor infrastructure ... Read Full Answer >>
  2. Why is investing in oil and gas in emerging markets riskier than investing in developed ...

    Investments in oil and gas in emerging markets generally carry higher risks than similar investments in developed countries. ... Read Full Answer >>
  3. How do the average costs compare for the different types of oil drilling rigs?

    Average costs vary widely between different types of oil rigs, starting at around $20 million and ranging as high as close ... Read Full Answer >>
  4. What role do SPVs / SPEs play in public-private partnerships?

    When created and used in conjunction with a public-private partnership (PPP), a special purpose vehicle (SPV) -- sometimes ... Read Full Answer >>
  5. Why are most multinational corporations either from the US, Europe or Japan

    The United States, Japan and member states of the European Union are developed countries whose infrastructures and well-established ... Read Full Answer >>
  6. Which types of industries have the largest capital expenditures?

    Capital expenditures are major purchases, such as facilities and equipment, that companies make to maintain or expand their ... Read Full Answer >>
  7. Why is President Obama hesitant to approve the Keystone XL Pipeline project?

    President Barack Obama's hesitancy over the TransCanada Keystone XL pipeline project is a matter of politics and priorities. ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Real Estate Investment Trust - REIT

    A REIT is a type of security that invests in real estate through property or mortgages and often trades on major exchanges ...
  2. Section 1231 Property

    A tax term relating to depreciable business property that has been held for over a year. Section 1231 property includes buildings, ...
  3. Term Deposit

    A deposit held at a financial institution that has a fixed term, and guarantees return of principal.
  4. Zero-Sum Game

    A situation in which one person’s gain is equivalent to another’s loss, so that the net change in wealth or benefit is zero. ...
  5. Capitalization Rate

    The rate of return on a real estate investment property based on the income that the property is expected to generate.
  6. Gross Profit

    A company's total revenue (equivalent to total sales) minus the cost of goods sold. Gross profit is the profit a company ...
Trading Center
You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!