Infrastructure investment needs to increase by 3% of GDP
“The countries of the region should increase investments in infrastructure up to 3 percentage points with respect to GDP to close the gap that separates them from the advanced economies.
That 50 million Latin Americans joined the middle class in the past fifteen years is undoubtedly good news for the region. But it is not so good that this growth has not been accompanied by improvements in infrastructure, especially with respect to transportation, energy, telecommunications, or comprehensive water management.
The result of this reality is that the gap that separates the countries of Latin America from more advanced economies continues to limit the hopes of having an economic and social development that includes all the inhabitants of the region.”
“It is estimated that Latin America should increase investments by 3 percentage points with respect to GDP if it intends to enter the league of developed regions, and everything indicates that the public sector cannot, by itself, mobilize the necessary expenses.”
“Public-private investments represent a good tool to maintain the rhythm of investments in infrastructure projects. Among the advantages offered is the amount of additional funds, beyond public resources, to invest in development projects while, at the same time, incorporating the private sector's technical and managerial knowledge, contributing value added and greater technical efficiency.”
“In Latin America, investments in infrastructure have developed mainly in the areas of transportation (for the most part in highways), electric energy (supply and generation of electricity), telecommunications, and public equipment. The sectors that lag behind are those of water and sanitation, and urban transportation.
The region faces important challenges to finance infrastructure, among which the channeling of financial resources for projects that contribute a high socio-economic value stands out. These objectives can only be undertaken if the countries of the region commit to strengthen their institutions to provide legal security to investments while at the same time encourage an adequate risk management and transparency policies.”
Published on the webpage of CAF, Latin American Development Bank (www.caf.com), on 18 February, 2016.