LatAm, Caribbean 'should invest 6.2% of GDP' in infra

The Economic Commission for Latin America and the Caribbean urges countries in the region to invest more in infrastructure.

Latin American and Caribbean countries should invest 6.2 percent of their gross domestic product (GDP) each year till 2020 to satisfy their infrastructure demands, according to new estimates in a study released by the Economic Commission for Latin America and the Caribbean (ECLAC).

That translate into some $320 billion worth of infrastructure investment, according to the United Nations study, which has been prepared by the infrastructure services unit of ECLAC’s natural resources and infrastructure division.

The figure of 6.2 percent of GDP comes from applying the investment trajectory to expected infrastructure needs, and assumes the historic pattern of country investments will be repeated.

The last decade saw an average of 2.7 percent of GDP in those countries being allocated to infrastructure investment, which shows that the region is not investing nearly enough, the report said.

The study also says that an adequate response to requirements in this field will be key for the region’s position in the global economy in the 21st century and for its people’s quality of life.

ECLAC also published the Economic Infrastructure Investment in Latin America and the Caribbean Database 1980-2012 (EII-LAC-DB) in the report. The database collects and systemises figures by country and investment origin (public or private) and updates the annual investment requirements in four main economic infrastructure sectors – transportation, energy, telecommunications, and water and sanitation – to respond to the needs that will arise from the region’s companies and end-users in that same period.

The database showed a trend towards increasing investment in the four economic infrastructure sectors during the 2003-2012 period, with transportation drawing the biggest amount of investment since 2005, followed by energy, telecommunications, and water and sanitation.

In 2012, average regional investment in the four sectors accounted for 3.49 percent of GDP, the report showed.

Costa Rica invested 5.47 percent of its GDP in public and private infrastructure, the highest figure among its fellow countries in the region. Uruguay came in second with 5.08 percent of  GDP, while Nicaragua was next with 4.93 percent. Bolivia ranked fourth with 4.47 percent of GDP and Peru got fifth place with 4.46 percent of GDP. Brazil came in at number six with 4.10 percent of GDP.

The ECLAC said in the report that investment in infrastructure projects contributes to increasing the coverage and quality of public services such as health, education and recreation, and reduces the costs associated with mobility and logistics, which in turn improves access to markets of goods, services, employment and financing, providing a favorable environment for improvements in the population’s overall well-being.