Etude

Old infrastructure, new investments

Urbanization in developing nations and obsolescence in developed nations will spur infrastructure spending.

Par Karen Harris et Andrew Schwedel

First published on septembre 09, 2011
min


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 Read More Macro Trends Insights Demographics, automation and inequality could dramatically reshape our world in the 2020s and beyond. Our insights discuss how executives can prepare for the new global economy.

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

the-great-eight-2-1_embed

After decades of declining fixed-capital investment, renewal of infrastructure will be required

the-great-eight-2-2_embed

Cumulative infrastructure spending through 2030 is expected to be $41 trillion, about half of it in advanced economy regions

the-great-eight-2-3_embed

Budget shortfalls in OECD countries will make alternative business models, such as public-private partnerships, increasingly common

Macro Trends Insights

Demographics, automation and inequality could dramatically reshape our world in the 2020s and beyond. Our insights discuss how executives can prepare for the new global economy.