Bridging the Infrastructure Gap

Problem

There has been an increased awareness and investment in infrastructure in prior years due to the sheer importance and economic viability of it, however it still is not enough. Daily, thousands migrate and flock to nations prompting the question of whether nations has the necessary infrastructure in place to accommodate the large influx of people. Countries face the possibility of being paralyzed economically if these infrastructure gaps that exist continue remain.

Explained

Virtually every economy faces a form of infrastructure challenge and this is magnified with the expected increase in global GDP growth & population in coming years. According to a McKinsey&Company 2016 report, the world invests about 2.5 trillion a year on major infrastructure networks such as transportation, power, water and telecommunications. Yet it’s still not enough. Major economies are beginning to put investing in infrastructure a priority. For example, in 2016 Canada launched the Infrastructure bank to “help fund major construction projects across the country”. The US government also recently unveiled their long-awaited infrastructure plan, an approximate $1.5 trillion to “repair and upgrade America’s infrastructure”. To address the chronic underinvestment in areas such as transportation, road, water structures; there has been a role expansion for public-private partnerships. Emerging markets are beginning to join in the movement too by raising infrastructure investment as India and China are amongst the world’s largest infrastructure market in terms of spending.

Implications

Without increased awareness and public & private financing, the infrastructure gap is one that will continue to grow which would then spill over into the economy by eroding future growth potential and productivity (McKinsey&Company, 2016). Furthermore, infrastructure like it or not, effects even the smallest aspects of our day-to-day lives. Take it from a manufacturer’s point of view, lack of proper investment in the right infrastructure can hinder customer service, lead to bad supply chain and increased operating costs.

Conclusion

The level of advanced infrastructure systems in place in addition to the mechanics needed to sustain it gives rise to steady growth in a country. With an increase in world population, having a sustained infrastructure helps in providing the support that is needed. Even with the increased spending by countries, there is need to improve the channels of how the investment is spent to prevent bottlenecks or hinder innovation.

Sources

  1. https://money.cnn.com/2018/02/11/news/economy/trump-infrastructure-plan-details/index.html
  2. https://www.mckinsey.com/industries/capital-projects-and-infrastructure/our-insights/bridging-global-infrastructure-gaps
  3. https://hbr.org/2013/04/fixing-the-worlds-infrastructu
  4. https://globalnews.ca/news/3039197/liberals-announce-canada-infrastructure-bank-what-is-it-and-how-does-it-work/
  5. https://www.mckinsey.com/industries/capital-projects-and-infrastructure/our-insights/improving-the-delivery-of-road-infrastructure-across-the-world
  6. http://lidd.ca/why-infrastructure-matters/
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About the Author

Lois Anaide
Lois AnaideUndergraduate Relations
A third year undergraduate in Schulich’s iBBA program, Lois became interested in the field of Real Estate and Infrastructure through her work experience as a Research Analyst and an Administrator in the Residential Sector. Aiming to specialize in the commercial sector, she works to connect and increase exposure of the industry to the Schulich undergraduate body.

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