Historical Context: Victorian Infrastructure Planning
The London Underground, the world’s oldest subway system, was inaugurated in 1863. Simultaneously, civil engineer Joseph Bazalgette designed London’s modern sewer system in response to the Great Stink of 1858, which halted Parliament. With foresight, Bazalgette built the system to last 150 years. Now, with the Thames Tideway project, it’s being significantly expanded.
Travel through any major UK city—London, Glasgow, Belfast, or Bristol—and you’ll find much of the late Victorian-era infrastructure still in use. This is partly due to the Victorians’ anticipatory and decades-ahead planning. Much like in other countries, the UK’s infrastructure is a palimpsest, with new layers built upon the old.
The Rise of Digital Infrastructure
A similar dynamic is unfolding today as new technologies integrate into daily life and economic growth. Broadband, mobile networks, and data centers—now as vital as roads and power grids—are prime examples.
The Evolving Concept of Social Infrastructure
Moreover, the concept of social infrastructure is gaining traction among policymakers worldwide. The UK’s new 10-year infrastructure strategy, for instance, focuses on collaboration opportunities, productivity and efficiency gains, and broader benefits of strategic spatial planning in healthcare, education, and justice systems.
While the emphasis lies mainly on physical assets supporting these services, the plan reflects a broader understanding of what constitutes infrastructure.
Expanding the Definition of Infrastructure
However, this view is still too narrow. Consider the characteristics of systems sustaining our economies: long lifespans, high fixed costs, low marginal costs, and wide accessibility. Their value stems not from physical assets themselves but from the economic activities they enable.
Our definition of infrastructure should expand to reflect the demands of the digital age. While governments typically consider AI infrastructure in terms of data centers and their energy and water consumption, a truly holistic view must also include intangible assets like software and data.
The Growing Importance of Digital Infrastructure
COVID-19 lockdowns in 2020-21 revealed how essential digital platforms have become. Video conferencing tools like Zoom, for example, are crucial for work, education, and public services, making it hard to imagine life without them.
As a result, an increasing number of countries are developing what’s often called public digital infrastructure, though in practice it usually involves a mix of public and private services.
- Brazil: The Brazilian central bank launched the real-time payments system Pix in 2020, largely replacing cash transactions.
- India: The Aadhaar biometric identification system now serves both public services and digital payments, while Estonia’s X-Road data exchange platform underpins much of the country’s e-government.
These digital systems have been adopted more quickly in countries with fewer established traditional services. Conversely, countries like the US and the UK have well-established private payment systems, which can make it challenging to adopt public alternatives.
Challenges and Opportunities
Given their growing economic importance, governments must start strategically thinking about software and data—the digital equivalents of roads and power grids.
- Indirect Demand: Infrastructural demand is indirect, and its components form a complex, interdependent system, making it difficult to assess the impact of each project.
- Intangible Assets: Governments with liquidity issues often underinvest in resources like data and software, while private investors typically view them as too risky. However, a lack of robust and well-maintained digital foundations can hinder economic growth.
National Sovereignty and Digital Infrastructure
Another reason to invest in digital infrastructure is national sovereignty. In recent years, policymakers worldwide have shown growing concern about the national security risks posed by US companies’ dominance in cloud computing.
These concerns were heightened by Microsoft’s decision to suspend the email account of Karim Khan, the International Criminal Court’s chief prosecutor, at the US president Donald Trump’s administration’s behest.
The Takeaway for Governments: Policymakers should distance themselves from immediate critical points and adopt a long-term perspective. Infrastructure provides a useful lens for strategically considering which investments are needed, who should make them, and how they should be managed to sustain economic growth.
Key Areas for Investment:
- Judicial System: Not only for its physical infrastructure but also for the timely, predictable, and procedurally fair application of law.
- High-Quality Databases and Interoperable Software: Facilitate user authentication, improve cloud service access, and foster the creation of new digital businesses.
Author: Diane Coyle, Professor of Public Policy at the University of Cambridge, is the author of “Cogs and Monsters: What Economics Is, and What It Should Be” (Princeton University Press, 2021) and “The Measure of Progress: Counting What Really Matters” (Princeton University Press, 2025).
