Summary of Strategic Infrastructure

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8

Qualities

  • Innovative

Recommendation

Infrastructure drives all economic output, yet the world faces a $1 trillion shortfall in infrastructure spending every year. In this clear, accessible report, the World Economic Forum, in partnership with the Boston Consulting Group, highlights the political and regulatory hurdles that public-private partnerships (PPPs) often encounter in infrastructure projects. The study outlines current best practices and provides real-world examples of successful PPPs in action. While the study does not promote specific policies, the omission is reasonable, given that investment landscapes and infrastructure needs vary dramatically across countries and regions. getAbstract suggests this objective overview to senior officials making strategic decisions on infrastructure, as well as to investors, developers, executives and leaders of nongovernmental organizations.

About the Author

The World Economic Forum is an independent global organization that engages leaders of business, politics, academia and society to improve the state of the world.

 

Summary

Infrastructure Development and Economic Growth

Infrastructure development and economic output grow symbiotically. The world must spend $4 trillion on infrastructure every year from now to 2030 to optimize growth, yet it falls short by $1 trillion annually. The public sector alone cannot meet that goal, and private investors are reluctant to fill the gap. By their nature, infrastructure assets require a long time horizon, so investors must cope with considerable ambiguity. Political and regulatory changes can alter a project’s progress and viability, and its payback to investors can occur long after the contracting policy makers are out of office. To ensure that the return is worth the risk, public-private partnerships (PPPs) need to explore new ways of enabling infrastructure development.

Political and Regulatory Risk

The lifespan of an infrastructure project moves through three distinct stages, each with its own risks:

  1. “Planning/design/construction” – Newly elected leaders sometimes cancel projects that their predecessors approved. Environmental and social impact studies delay construction permits, or permits may include unanticipated...

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