Geography and Infrastructure

Geography and Infrastructure

The Ancient Roman Empire is a great example of how geography and infrastructure play a major role in the success of a nation. Over two thousand years ago the Roman Empire essentially ruled the world. Their empire stretched from England to Africa, Syria to Spain. The geography, in what is modern day Italy, definitely attributed to the empire being able to reach these parts of the world; with the Romans have access to the sea and rivers. As the empire grew the Romans looked for ways to better facilitate the movement of food, goods, and soldiers; and thus the advent of paved roads came about. Roadways became their lifeblood and connected their vast empire, making the Ancient Roman Empire the greatest of its time. Fast forward to the globalized society we live in today and geography and infrastructure still play a major role, but instead of it being important to the success of a nation it is important to the success of an international firm.  The article The Effects of Geography and Infrastructure on Economic Development and International Business Involvement further explains the importance of geography and infrastructure to an international firm.

Geographic factors are influential to international trade between markets. At times the physical distance and terrain between countries can deter trade or it could be that a country is landlocked. Landlocked countries are usually viewed as an “impediment to economic development and to international trade.” In the article it is shown that landlocked countries have transport costs that are fifty-five per cent higher than countries that have water access. In chapter six of the book we learned that countries that are near bodies of water are going to be more developed because water attracts people and facilitates transportation. An international company looking to enter a foreign market will naturally want to keep costs as low as possible. A landlocked country that may not be as developed as a country near bodies of water will not be as attractive. This is further backed by the articles argument that landlocked nations have limited economic development and global participation.  

The book does not go into depth about the effect of there being a lack of adequate infrastructure but chapter seven does, though, describe the differences between a developed and developing country. A country that is still developing is not going to have an infrastructure system that matches the U.S. or France. This chapter also lists the fifty least developed nations in the World and a vast majority are located in Africa. Not surprising considering how many countries there are landlocked. According to the article a solid infrastructure has a positive effect on economic development. Countries that are considered to be developed benefited from there being a focus on infrastructure development early on and this is confirmed by many studies. Efficient road systems contribute to market integration and reduce transportation costs. Also if a nation wants to have global involvement through FDI and international trade, infrastructure development is a must so companies can coordinate their international business activities.