Latin America Must Double Investments in Infrastructure

(Panama,October, 2013).-Under the premise that quality infrastructure is a key factor in the development of more inclusive and competitive societies, CAF-development bank of Latin America-unveiled its Infrastructure for Integral Latin American Development (IDeAL 2013) report at a recent Ibero-American Summit of Heads of State and Government in Panama City. 

The report, a request from the Ibero-American General Secretariat, includes an analysis of Latin America's current infrastructure situation and proposes a strategic development agenda for the region. 

The report's conclusions stem from detailed analysis of different sectors in infrastructure (transportation, electric energy, natural gas transportation, telecommunications and water resources management), and all indicate that Latin American countries should develop comprehensive infrastructure development plans that ensure the upmost productivity of all resources going towards long-term infrastructure investments involving both the public and private sectors. Planning should also seek ways to minimize risks arising from policy shifts that come with administration changes. Success will require creating capable and solid institutions and a commitment "to do more with less" by the various players in the process. 

Additionally, the report analyzed ways to strengthen governmental capacities to plan, implement, operate and supervise infrastructure, which involves improving technical capacities within public agencies and passing adequate legislation and applicable regulations.

CAF's report stressed that state and municipal governments are gradually increasing their involvement in infrastructure investment and development, especially in urban areas, so addressing public-sector know-how is not limited to national governments, and they should seek to harmonize criteria among the various levels of government.

"At a time when the global economy is experiencing profound structural changes that will present great opportunities as well as serious challenges to Latin America, CAF intends to continue with its significant efforts conducting research and generating knowledge on infrastructure and logistical issues," said CAF Executive President Enrique García during his presentation of the report. 

The document's strategic agenda formulates several medium- and long-term action plans that stress the need for significant increases in investments in infrastructure. So far, progress has been modest in this aspect: in 2010 the region's investment in infrastructure hovered near 3% of GDP, and data available for 2011 and 2012 suggest that that level will remain largely unchanged as it accompanies GDP growth. 

On this same token, various industry observations show that Latin American countries will see increased demand for infrastructure projects in the future. For example, the growth of the middle classes across the region and an increasing number of open-trade policies adopted by several countries needed to move forward towards full-scale free trade agreements have made significant impacts on infrastructure demands, drawing attention to the need in the region to accelerate the pace of expansions and upgrades. 

The IDeAL report also recommends that countries should review their strategic logistical ambitions, as the expansion of the Panama Canal will generate new business opportunities for many countries: value-added, cross-border business projects in new logistics parks near the Latin American ports. Opportunities will become available in and around ports in every country. CAF plans to support countries develop these opportunities.