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Bridging global infrastructure gaps

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Today the world invests some $2.5 trillion a year in the transportation, power, water, and telecom systems on which businesses and populations depend. Yet this amount continues to fall short of the world’s everexpanding needs, which results in lower economic growth and deprives citizens of essential services. Building on MGI’s 2013 report Infrastructure productivity: How to save $1 trillion a year, this research updates our estimates of the world’s infrastructure needs and projected investment shortfalls. It also offers refined recommendations for bridging those gaps. Among our findings:

From 2016 through 2030, the world needs to invest about 3.8 percent of GDP, or an average of $3.3 trillion a year, in economic infrastructure just to support expected rates of growth. Emerging economies account for some 60 percent of that need. But if the current trajectory of underinvestment continues, the world will fall short by roughly 11 percent, or $350 billion a year. The size of the gap triples if we consider the additional investment required to meet the new UN Sustainable Development Goals.

Infrastructure investment has actually declined as a share of GDP in 11 of the G20 economies since the global financial crisis, despite glaring gaps and years of debate about the importance of shoring up foundational systems. Cutbacks have occurred in the European Union, the United States, Russia, and Mexico. By contrast, Canada, Turkey, and South Africa increased investment.

Source : McKinsey Global Institute

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