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Since the 1980s, investment in Brazil’s infrastructure has declined from 5% to a little above 2% of the country’s Gross Domestic Product (GDP), scarcely enough to cover depreciation and far below that of most middle-income countries (see figure below). The result is a substantial infrastructure gap. Over the same period, Brazil has struggled with stagnant productivity growth. The poor status of infrastructure is broadly believed to be a key reason for Brazil’s growth malaise.
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Canada has quietly become a leading player in the global PPP space. The unique Canadian version of the procurement model has evolved from an innovative idea promoted through the wisdom and passion of a few early believers and visionaries into a widely applied approach, embraced by all three levels of government and in every region of the country.
What might seem an “overnight success” has, in fact, taken 25 years of listening and learning to develop a smart, innovative, modern approach to infrastructure and service delivery using Public-Private Partnerships. It’s an approach that ensures real value for tax dollars and the efficient use of precious public resources.
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Whether an infrastructure project should be pursued through government funding, official development assistance (ODA), a Public-Private Partnership (PPP), or a hybrid, is a matter of finding the solution that best meets a government’s objective given a set of constraints and the risks presented by each option.
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The Latin America and Caribbean region (LAC) has an infrastructure gap: the region needs to invest at least 5% of GDP to cover its infrastructure needs, but is currently investing only half that. To put it mildly, there is still a lot of room for improvement for both the public and private sectors, and also for multilaterals working in the region.
In a combined effort to reduce infrastructure gaps, Public-Private Partnerships (PPPs) have become, again, a popular tool since 2005. LAC was the predominant region for PPPs until the late 1990s, when investments plummeted due in part to a backlash of poorly-implemented PPPs.
Triggered by low commodity prices and rising fiscal deficits, as well as by improvements in PPP readiness, many countries established dedicated agencies and strengthened regulations leading to increases in PPP investments from $8 billion in 2005 to $39 billion in 2015. In total, LAC has seen investments of $361.3 billion in around 1,000 PPP infrastructure projects in just one decade, mostly in energy and transport.
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Foto (direita): Amarin Jitnathum / Shutterstock
A região da América Latina e Caribe (ALC) apresenta uma lacuna em termos de infraestrutura: a região precisa investir no mínimo 5% do PIB para atender suas necessidades neste setor, mas atualmente investe apenas metade desse percentual. Explicando de uma forma suave, há ainda muito espaço para melhorias por parte do setor público, do setor privado, bem como das organizações multilaterais que trabalham na região.
Em um esforço combinado de reduzir as lacunas de infraestrutura, as Parcerias Público-Privadas voltaram a ser uma ferramenta popular a partir de 2005. A ALC era a região com maior predominância de PPPs até o fim dos 1990s, quando os investimentos despencaram em parte como reação adversas provocadas por PPPs mal implementadas.
Incentivados pelos preços baixos dos produtos primários e déficits fiscais crescentes, assim como pelo aprimoramento da capacidade de preparação de PPPs, muitos países criaram agências específicas e fortaleceram regulamentações que levaram ao aumento de investimentos em PPPs de US$ 8 bilhões em 2005 para US$ 39 bilhões em 2015. No total, em apenas uma década, a ALC teve investimentos de US$ 361,3 bilhões referentes a aproximadamente 1000 PPPs de projetos de infraestrutura, principalmente nos setores de energia e transportes.
Welcome to the “10 Candid Career Questions” series, introducing you to the infrastructure and PPP professionals who do the deals, analyze the data, and strategize on the next big thing. Each of them followed a different path into infra and/or PPP practice, and this series offers an inside look at their backgrounds, motivations, and choices. Each blogger receives the same 15 questions and answers 10 or more that tell their career story candidly and without jargon. We believe you’ll be as surprised and inspired as we were.
Photo: Ashim D'silva | Unsplash
From “Billions to Trillions”, to the Hamburg Principles and Ambitions, to Maximizing Finance for Development (MFD), Realizing that constrained public and multilateral development bank (MDB) funding cannot fully address the critical challenges that developing nations face, the World Bank Group is pursuing private sector solutions whenever they can help achieve development goals, in order to reserve scarce public finance for when it’s needed most. This is especially true in the delivery of infrastructure.
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In my last blog, I compared Public-Private Partnerships (PPPs) with marriage. I had explained that, though very different, the public and private can come together as they each possess characteristics beneficial to the other. Great in theory, but often difficult in practice.
Critics of PPPs abound and listing them here would be impractical. But whether they are auditors, civil society or within the World Bank Group, critics help us improve. We try to respond to our critics, including through blogs such as this one.
Those following the discussions during the IMF and World Bank Group Annual Meetings held in Washington last week will have noticed that our approach toward international economic development is changing in a major way—and, I believe, for the better.
Saturday’s panel discussion on Maximizing Finance for Development set the context that many in the development community now know well, but bears repeating: It will take not billions, but many trillions of dollars to meet rising aspirations for better infrastructure, health and education. Specifically, we are talking about $4 trillion every year needed to meet the Sustainable Development Goals to which the international community agreed in September 2015.
The protection of real property rights and improving the efficiency of land and property markets are key pillars in a modern, well-functioning economy. Over the last 30 years, many countries have initiated programs to issue land titles for all properties, improve the performance of land administration services, automate land information systems, and integrate them with ongoing e-government and e-service programs.
The World Bank, often with other development partners, has provided more than $1.5 billion in grants, credit and loans to more than 50 countries to support the implementation of such programs. Other bilateral and multi-lateral development partners have also provided substantial funding and technical assistance to many countries.