Five Misconceptions about Infrastructure
May 19, 2013 Editor 0
Ensuring that the world economy and its citizens have sufficient infrastructure—from transport systems to electricity grids and water pipelines—is an increasingly pressing issue. It’s also a subject matter surrounded by misconceptions. Five are worth noting:
1) Lack of investment is not always to blame.
The first is a common assumption that when infrastructure is too inadequate, congested, or old, the culprit is always a lack of investment. The truth is more complex. Globally on average, infrastructure stock –which includes transport (road, rail, ports and airports), power, water and telecommunications–accounts for about 70 percent of a country’s GDP. Brazil, whose infrastructure stock is less than 20 percent of GDP, under-spends chronically compared with its economic size and growth. It seems no coincidence that the country’s airports are 122nd out of 142 in the World Economic Forum’s rankings. Other under-investors include the United Kingdom, Canada, India, and the United States. But other countries over-invest for the size of their economies. China, Poland, Italy, South Africa, and Japan are among them. Japan’s stock of infrastructure is equivalent to nearly 180 percent of its GDP. Over the past 18 years, growth would have “justified” investment of around 3 percent of GDP, but Japan spent 5 percent.
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