INFR A STRUCTURE
GLOBAL OVERVIEW Infrastructure, industry
and innovation are key ingredients to economic growth and sustainable development and can help countries reduce poverty and improve wellbeing and living standards. According to the United Nations’ (UN) Statistics Division, in recent years, steady improvements have been made in these areas but renewed investment is needed in the least developed countries (LDCs) to build infrastructure and ensure the doubling of industry’s share of GDP in those countries by 2030.
Latin America: infrastructure outlook Private investment in infrastructure in Latin America is significantly higher than in other developing regions. For example, in Asia, only about 10 percent of infrastructure is privately funded, compared with over 50 percent in Latin America. While this is a seemingly favorable comparison for Latin America, governments across the region have set clear intentions to increase the level of private investment over the coming years. Total infrastructure investment in the region is estimated at 2.8 percent of GDP, which significantly trails the investment requirement of 5.2 percent by the UN. Estimates of the infrastructure financing gap in the region vary, but it is generally accepted that if the gap is to be closed, investment levels need to increase in the six countries which account for over 90 percent of infrastructure investment in the region (Argentina, Brazil, Chile, Colombia, Mexico and Peru).
Source: Overview of Infrastructure Investment in Latin America produced by the Inter-American Development Bank, IDB Invest and Marsh & McLennan Companies.
According to the World Bank’s Rethinking Infrastructure in Latin America and the Caribbean report, Latin America invests the least in infrastructure among developing regions.
8
Total infrastructure investment in Latin America and the Caribbean (US$ billion): data from InfraLATAM 2008-2015
170 160 150 140 130 120 110 100 90 80 70 60 50 40 30 20 10 0
08
Brazil Peru
09 10
Mexico Chile
11 12 Colombia Rest of LATAM 13 14 Argentina 15
Transport and wastewater remain challenges, but the region performs quite well in terms of electricity and water. The report notes that Latin America’s clean, sophisticated electricity sector could become a serious competitive advantage. The main message of the report, which is aptly sub-titled Spending Better to Achieve More, is that Latin America can dramatically narrow its infrastructure service gap by spending efficiently on the right things: “…the investment gap approach necessarily focuses attention on the question of raising more resources. But closing the service gap should not – and, indeed, cannot – be just about spending more. The service gap can be narrowed, if not closed, in two other ways: by ensuring that spending (particularly of scarce public resources) is well targeted and that it is efficient.”
44%
Public investment contributes
of total investment
Latin America and the Caribbean
2.8% Breakdown of investment by sector: data from InfraLATAM 2008-2015 17% 24% 2% 57% Energy 56%
Private investment contributes
of total investment
32% Telecoms Transport Water 3% 28% 37%
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