WASHINGTON, United States — A new study by the Inter-American Bank (IDB) has found that growth in Latin American and Caribbean (LAC) is sharply impacted by the failure to invest in infrastructure.
The Washington-based financial institution said that the study looks at energy, transportation, telecommunications, and water and sanitation sectors in six countries, “indicative of the reality for the entire region”. The countries used in the study are Argentina, Bolivia, Costa Rica, Chile, Jamaica and Peru.
“On average, failure to add new capital to existing stocks is estimated to cost the selected Latin American and Caribbean countries approximately one percentage point of forgone GDP (gross domestic product) growth. The cost rises to 15 percentage points in forgone growth if the gaps persist over 10 years,” the IDB said, adding that this is the equivalent of around US$900 billion based on the current GDP levels for the entire region.
The IDB Group’s annual Macroeconomic Report, which this year has a focus on infrastructure investment, noted the infrastructure investment gap in the region is estimated at around 2.5 per cent of GDP, or around US$150 billion per year.
“Latin America and the Caribbean not only lags in investment amounts but also in quality,” the report added.
IDB Principal Economic Advisor Andrew Powell, one of the report’s editors, said the impacts vary across countries,
“Our analysis shows just how critical more and better investments are needed in infrastructure, tackling issues that range from better project identification to financing constraints,” he said.
Leave A Comment