WB Warns Latin America Should Invest More in Infrastructure

Latin America and the Caribbean need to shell out some $70 million annually in infrastructure over the next five years to boost up economic growth and competitiveness, a study conducted by the World Bank (WB) points out.

The multilateral banking body’s report issued in Buenos Aires indicates that regional countries ought to invest more money in transportation, power grids, telecommunications, water supply and sewerage “in order to reverse inequality and raise income per inhabitant.”

“Shortage of investment in infrastructure is hampering economic growth in the long run and making a dent in competitiveness, thus causing the region to lag behind,” says Danny Leipziger, WB director of finances, private sectors and infrastructure for Latin America and the Caribbean.

Repercussions of good infrastructure in economic development, competitiveness and inequality were some of the topics discussed at the Latin American Conference on Infrastructure Financing that took place over the weekend at the Buenos Aires Chamber of Commerce.

“As the world’s most economically uneven region, Latin America and the Caribbean need to invest a whole lot more in infrastructure in order to ratchet up income levels and do away with inequality,” Mr. Leipziger explained.

The report notes that the private sector has lost its zip as far as infrastructure investment is concerned, not to mention that the public sector is forking over less and less money every time. In most of the region’s countries, investment volume does not exceed one percent of the combined GDP, compared to a much needed 3 percent of the total.

“It’s worrisome to see that governments can’t come up with more money to ramp up investment because of cash-strapped budgets. But there can’t be no sustainable prosperity unless we can zero in on the weak state of infrastructure in our nations,” Mr. Leipziger concluded.

According to the World Bank, scarce logistical infrastructure is making corporate Latin America lose twenty times more money than industrialized countries do because, as a general rule, rich nations spend two and a half times more cash in infrastructure and their inventory stocks are threefold bigger.