Financing the Infrastructure Gap
Infrastructure – from roads and railways to ports and bridges – and economic growth go together. The best way to meet the world's growing infrastructure needs is to use multilateral development banks’ unique relationships with governments and the private sector, as several recent initiatives have shown.
LONDON – Infrastructure – from roads and railways to ports and bridges – and economic growth go together. That is why international financial institutions such as mine need to answer appeals for greater investment to help close a $1 trillion global “infrastructure gap.” Our best chance of meeting the world’s growing infrastructure needs is to use multilateral development banks’ unique relationships with governments and the private sector to coordinate our response.
Consider, for example, the progress already being felt in emerging markets. In the past year, the World Bank Group, the Asian Development Bank (ADB), the Inter-American Development Bank (IADB), the African Development Bank, the European Investment Bank, and the European Bank for Reconstruction and Development (EBRD) have all created “project preparation facilities” (PPFs) to improve the quality of project development, while also strengthening the local capacity needed to ensure lasting results.
The various PPFs that have been launched can act as a model for public officials in emerging markets to emulate. The Infrastructure Project Preparation Facility, launched by the EBRD last year, is one example: by using pre-selected “framework consultants,” the facility can accelerate high-quality project preparation for both public-sector projects and public-private partnerships (PPPs). This dual focus is important: private-sector finance is critical, but the public sector still finances some 90% of all infrastructure investment worldwide.
We hope you're enjoying Project Syndicate.
To continue reading, subscribe now.
Get unlimited access to PS premium content, including in-depth commentaries, book reviews, exclusive interviews, On Point, the Big Picture, the PS Archive, and our annual year-ahead magazine.
Already have an account or want to create one? Log in