changes in the world economy (ECMT, 2003). The competition generated by globalization has increasingly led users to demand faster, more reliable, more flexible transportation services. Thus increased demand, structural economic change, and new industrial logistics have placed enormous pressure on transportation systems. National growth and international competitiveness are partly determined by how domestic transportation systems respond to these challenges. For example, in the 1970s and 1980s national inventories of raw materials for manufacturing were two to three times larger (relative to GDP) in developing and transition economies than in the United States—in large part because of weak transportation services. Large inventories undermined these countries’ competitiveness (Guasch and Kogan, 2003).

Electricity is an essential input to the production of almost all goods and services and is thus vital to the public interest. In addition, reliable electricity systems have become more important because businesses and households rely on electronic devices to perform an enormous range of tasks, both basic and advanced. Thus adequate, reliable, competitively priced electricity is essential for modernization, domestic growth, and international competitiveness.

Information has become a means for firms to perceive and seize new opportunities and new markets, and to satisfy new needs. Information is vital to corporate survival and critical to an economy's viability. Indeed, a large number of commercial activities—such as banking and international finance, tourism and travel, publishing, commodity exchange, and to a large extent all export-oriented manufacturing—as well as such sectors and functions as education, health care, transportation, and land management, are becoming critically dependent on global information and efficient electronic exchange. In a global information economy characterized by intense competition for new markets, telecommunications is rapidly becoming a vital component of national economic policy. Consequently, the quality of a nation's information infrastructure is increasingly viewed by many as an important determinant of its success in improving its balance of trade and overall economic performance. In fact, in the last decade, telecommunications policy in many countries has been formulated in the context of far-reaching global strategies. A liberalized telecommunications regime was intended to support and augment the role of specific cities as international financial centers; stimulate the development of electronic publishing and promote points of access to cities for international networks; attract commercial traffic destined for specific regions; and encourage the location of financial services business.

# **4.2  Infrastructure, economic integration, and globalization**

An important reciprocal relationship exists between infrastructure and economic integration.

Cross-border infrastructure facilitates physical connectivity which is essential for enhanced regional cooperation and economic integration. Indeed, the key driving forces behind the recent wave of globalization are lower barriers to trade and investment, and lower transportation and communication costs. Major efficiency improvements in transportation and the application of modern information and communication technologies have facilitated the geographic division of production processes. A much larger number of geographically dispersed production units can 8