Infrastructure

AAA

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.

INVESTOPEDIA EXPLAINS '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.

RELATED TERMS
  1. Economies Of Scale

    The cost advantage that arises with increased output of a product. ...
  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 FAQS
  1. 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 >>
  2. 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 >>
  3. 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 >>
  4. 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 >>
Related Articles
  1. 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.
  2. Personal Finance

    Early Monopolies: Conquest And Corruption

    This structure can be very effective, but it is also known for its abuse of power.
  3. Personal Finance

    A Primer On The Railroad Sector

    The railroad industry might seem antiquated, but it remains an important service that reaches all corners of the country.
  4. Taxes

    Parties For Taxes: Republicans Vs. Democrats

    Read about the political parties' differences in tax ideology, and how it can affect your paycheck.
  5. Personal Finance

    State-Run Economies: From Public To Private

    Find out how former Iron Curtain countries used private enterprise to join the world financial markets.
  6. Mutual Funds & ETFs

    Build Your Portfolio With Infrastructure Investments

    Mutual funds devoted to keeping roads, structures and communities safe can make you money.
  7. Entrepreneurship

    Top 6 Factors That Drive Investment In China

    FDI in China surpassed $100 billion in 2010, certain key factors drive foreign direct investment.
  8. Economics

    What is the Income Effect?

    In economics, the income effect is the change in the consumption of goods caused by a change in income, whether income goes up or down.
  9. Investing

    What Has Been Groupon’s Growth Strategy?

    Groupon established a strategy with efforts to become a broader force in the e-commerce world and to expand more strongly into international markets.
  10. Economics

    The Impact Of Ending The US Embargo On Cuba

    Many argue that ending the US embargo on Cuba will not only make US consumers happy, but also help the US economy and bring more freedoms to Cuba.

You May Also Like

Hot Definitions
  1. Fiat Money

    Currency that a government has declared to be legal tender, but is not backed by a physical commodity. The value of fiat ...
  2. Interest Rate Risk

    The risk that an investment's value will change due to a change in the absolute level of interest rates, in the spread between ...
  3. Income Effect

    In the context of economic theory, the income effect is the change in an individual's or economy's income and how that change ...
  4. Price-To-Sales Ratio - PSR

    A valuation ratio that compares a company’s stock price to its revenues. The price-to-sales ratio is an indicator of the ...
  5. Hurdle Rate

    The minimum rate of return on a project or investment required by a manager or investor. In order to compensate for risk, ...
  6. Market Value

    The price an asset would fetch in the marketplace. Market value is also commonly used to refer to the market capitalization ...
Trading Center