Should IITs improve their infrastructure

Transport infrastructure: a prerequisite for growth!

A well-functioning transport system is an indispensable prerequisite for prosperity and progress. The economy based on the division of labor is inevitably dependent on the mobility of people (professionals, trainees, students, customers, travelers) and goods (raw materials, intermediate and finished products). This is the only way to achieve low-cost specialization and an efficient allocation of labor and capital. For hardly any other country the efficiency of the transport system is more important than for Germany with its strong industry, the high degree of division of labor, the central location in the middle of Europe and its highly competitive export economy. Also because the "trade, transport and hospitality" sector in this country and today has over 8½ million employees - more than any other branch of the economy. The German logistics industry alone employs 2.82 million people. With an annual turnover of more than 220 billion euros, Germany is the largest European logistics market. The logistics industry is not just one of the most powerful drivers of employment. It also acts indirectly for the industry as a lubricant that ensures delivery reliability, punctuality and tailor-made, customer-oriented delivery of "Made in Germany" - worldwide.

The transport infrastructure in Germany was once the best in the world. But the condition of (water) roads, bridges and tunnels has got worse and worse. There is now an enormous amount of catching up to do, especially in the transport systems of the federal states and municipalities. In addition, there is a lack of funds for modernization and expansion. Dilapidated roads and dilapidated bridges reduce the international competitiveness of both individual companies and entire sectors. This harms the entire economy and not just the companies that are directly affected. In view of the outstanding importance of the transport infrastructure, it is incomprehensible why the opposite of what should be done is currently being done in Germany. Instead of promoting future investments in education, research and infrastructure, the grand coalition prefers to spend the money in many other places on current consumption. For example, the pension package, such as the pension from 63 years of age for those who have worked for more than 45 years, causes an average of around 10 billion euros in additional expenditure per year - this will amount to a total of 160 billion euros for the state budget by 2030. In contrast, a total of only 5 billion euros are planned for additional transport investments for the entire four-year legislature. That is totally inadequate.

According to the Daehre Commission “Future of Transport Infrastructure Financing” set up by the Conference of Transport Ministers of the Länder with the participation of the federal government, Germany would have to invest at least 7.2 billion euros in addition to roads, railways and waterways, and not once a year, “to avoid further economic damage and not endangering Germany as a business location. ”According to calculations by the German Institute for Economic Research (DIW),“ there is an annual investment gap of around 3.8 billion euros for the necessary reinvestments in the transport infrastructure alone ”. If you add the pent-up demand due to neglected replacement investments in recent years as well as only the selective investments required for network expansion and expansion, according to the DIW there is a total of "an investment gap of at least 10 billion euros per year."

From the perspective of the Institut der Deutschen Wirtschaft (IW), the investment deficit is even more dramatic. It estimates that a total of around 40 billion euros will have to be invested in transport infrastructure over the next ten years in order to resolve the investment backlog of the past. In addition, there will be an additional 40 billion euros in the next ten years for the modernization of the IT networks, i.e. in particular for a nationwide basic service with high bandwidths. Especially in the age of intelligent traffic control systems and the networking of roads, rails, waterways and airways as well as public and private local transport, fast and comprehensive access to unlimited communication is becoming a success factor. In the future, traffic and communication will merge more and more into one holistic system.

As such, the public coffers are well filled. Thanks to the positive economic and employment development, public budgets are currently more financially available than ever before - also for transport infrastructure investments. The easiest way would be to use the public money that is currently available carefully. With little effort, more efficiency and less waste are possible when planning and implementing government transport projects. Prestige projects that individual federal states or municipalities misuse as showpieces should also be prevented. And finally, maintenance and servicing, such as construction site management, can be improved.

From an economic point of view, it would be smartest to set the priorities of government action and reallocate government spending. Public funds should be used for less consumptive but more investive purposes. However, this path is politically unattractive. The grand coalition seems to be neither willing nor intended to mess with today's voters and especially with the steadily growing number of electorate pensioners, even if it does so for the children's children, who are still speechless and powerless today the room for maneuver is becoming narrower.

Not making additional investments in transport infrastructure is a tragic mistake because there is only a short-term conflict between infrastructure and social policy. In the long term, they go hand in hand - today's transport infrastructure investments are even an indispensable prerequisite for tomorrow's social benefits. Infrastructure investments increase the competitiveness of German companies. In doing so, they improve the framework conditions for growth and employment, which broadens the tax base and generates additional government income. That is why sustainable financing of the welfare state is only possible with and not without a strong economy.

As long as the public sector can obtain private money on the capital market on such favorable terms as is the case in the current period of low interest rates, the expansion of the transport infrastructure should precede the reduction of debt. Because there is no doubt that the return on infrastructure investments is higher than the current interest cost. The IW expects that 10 billion euros invested in roads, power grids and other state infrastructure will permanently increase economic output by 2.5 billion euros per year.

The German transport infrastructure is still better than the foreign one. But the lead is melting. The location advantage of the past threatens to turn into a renovation case for the future. This reduces the chances of prosperity and employment for future generations. Efficient transport routes are vital for an industrialized country like Germany. That is why the debate about the renewal of the infrastructure belongs in the middle of society and at the top of the economic policy agenda.