Old infrastructure, new investments
- September 09, 2011
What is behind the trend?
• Much of the critical infrastructure in developed countries was built more than 50 years ago and needs to be replaced.
• With public funds scarce, opportunities for public-private partnerships are likely to increase given adequate returns. For example, there has already been an upsurge in tollroad privatization. • Developing nations will also need new infrastructure and new spending. For example, despite the prevalence of wireless, its bandwidth limitations prevent wireless from substituting for expensive new fiber optic lines for all purposes. • China, the largest developing economy, may already suffer from overinvestment or misalignment of infrastructure.
What does it mean for business?
• There will be major lower-risk investment opportunities in developed markets through public-private partnerships.
• Opportunities in developing nations, where governments fund and operate infrastructure investments, will likely be limited to providing indirect support through the provision of supplies and sales of heavy capital equipment.
Global infrastructure demand impacts both advanced and developing markets
After decades of declining fixed-capital investment, renewal of infrastructure will be required
Cumulative infrastructure spending through 2030 is expected to be $41 trillion, about half of it in advanced economy regions
Budget shortfalls in OECD countries will make alternative business models, such as public-private partnerships, increasingly common