Despite MDBs heavy spending, emerging economy infrastructure remains underinvested

Juan Carlos Concepcion 04 March 2013   

According to the World Bank, there is a $1 trillion shortfall in infrastructure spending across emerging market countries and, on average, only 50% of the necessary infrastructure investment is realized annually despite growing consumer and producer demand, with the East Asia-Pacific and South Asia regions most in need of infrastructure investment; the World Bank estimates $407 billion and $191 billion are required, respectively, to sustain economic growth

According to the World Bank, there is a $1 trillion shortfall in infrastructure spending across emerging market countries and, on average, only 50% of the necessary infrastructure investment is realized annually despite growing consumer and producer demand, with the East Asia-Pacific and South Asia regions most in need of infrastructure investment; the World Bank estimates $407 billion and $191 billion are required, respectively, to sustain economic growth.

The situation is critical for developed economies and multinational companies who are increasingly looking to emerging markets for both supply chain capacity and consumer demand as more developed markets are in decline or remain stagnant. To date, analysts say, the private sector has backed away from major infrastructure projects in the developing world due to financial, political and regulatory risk and uncertainty. While the world’s major multilateral development banks continue to prioritize infrastructure spending (see listing below), analysts agree public sector spending is simply not enough to meet global demand.

Asian Development Bank

Infrastructure expenditure: $13.5 billion (62 percent of FY 2011 total budget)

Inter-American Development Bank

Infrastructure expenditure: $6.7 billion (62 percent of FY 2011 total budget)

EuropeAid

Infrastructure expenditure: $2.1 billion (57 percent of FY 2011 total budget)

African Development Bank

Infrastructure expenditure: $2.5 billion (39 percent of FY 2011 total budget)

World Bank

Infrastructure expenditure: $13.2 billion (37 percent of FY 2012 total budget)

 

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