New Battlegrounds in Development Finance

Infrastructure financing in the developing world is relying increasingly on public-private partnerships. The new appeal of PPPs may redefine not just development economics, but also the overall relationship between rich and poor countries – though not necessarily for the better.

PRETORIA – The popularity of public-private partnerships (PPPs) to support infrastructure development in emerging countries is growing worldwide. The G-20 backs PPPs to boost global growth and create jobs. The BRICS economies (Brazil, Russia, India, China, and South Africa) see them as a way to build essential infrastructure quickly and cheaply. The United Nations hopes that infrastructure PPPs will provide the means to realize its post-2015 global development agenda. PPPs’ new appeal may redefine not just development economics, but also the overall relationship between rich and poor countries – though not necessarily for the better.

The PPP bandwagon has three essential components: an explosion in infrastructure finance (backed by pension and other large funds); the creation of “pipelines” of lucrative mega-PPP projects to exploit countries’ raw materials; and the dismantling of environmental and social safeguards. Each must be carefully monitored as the use of PPPs expands.

The World Bank is already seeking to double its lending within a decade by expanding infrastructure projects. Its new Global Infrastructure Facility (GIF) will mobilize global pension and sovereign wealth funds to invest in infrastructure as a specific asset class.

To continue reading, please log in or enter your email address.

Registration is quick and easy and requires only your email address. If you already have an account with us, please log in. Or subscribe now for unlimited access.

required

Log in

http://prosyn.org/OXYES6f;