Infrastructure has long been recognized by G20 leaders as a fundamental driver for economic growth.
Physical and digital connectivity ensures inclusive, safe, resilient and sustainable human settlements. The last decades have witnessed an extraordinary urban growth and the trend is expected to continue, but adequate infrastructure and a reliable energy matrix allow regional economies to flourish, while digital infrastructure and collaborative efforts allow innovation to occur in every community, fostering investment and trade.
But most importantly, infrastructure is essential to guarantee a good quality of life and, ultimately, to sustain the social contract between communities and the State.
Estimates indicate that between 3-4% of the global GDP needs to be invested each year in infrastructure to achieve the growth goals and projections of G20 countries. According to estimates, in some regions like Latin America, investment needs may reach 8% per year as the infrastructure gap includes electricity access and drinking water coverage for rural populations.
Yet still an extremely insufficient ratio of the world’s financial funds is directed towards long-term infrastructure investment. This has been a staple of past B20 discussions, but more needs to be done and clear milestones need to be set to measure success.
Externalities impeding private capital flows need to be openly dealt with in order to move forward. By bringing together representatives of the financial community of B20 countries and experts in infrastructure, B20 can help by providing recommendations to foster private investment in well-defined, visible, transparent projects. Furthermore, establishing an adequate role for multilateral banks will ensure the consideration of infrastructure investments as an asset class attracting institutional investors in every infrastructure category.
We all acknowledge the role played by G20 in dealing with global financial crises in the past. But more work may be necessary in regulatory coherence and tax cooperation to foster business development and sustainable GDP growth. B20 will continue to support and actively participate in this discussion.