There is widespread agreement that the economies of Latin America and the Caribbean are not growing fast enough. There are many reasons for this, among them the end of the commodities boom, large fiscal deficits, corruption, the electoral cycle, and high levels of political uncertainty. While the exact role each of these factors has played is open to debate, it is also true that low growth can be traced back to a simple and at first sight rather more technical issue: low levels of investment, particularly in infrastructure.
Introduction
A 2015 report by CAF, the Development Bank of Latin America, titled Public-Private Partnerships in Latin America, has shown that infrastructure investment levels in the region have historically oscillated between 1% and 2% of GDP, trailing far behind the 8%- 10% achieved in some countries in East Asia. More recently, Héctor L. García Salgó, regional president for Latin America of Bechtel, the US civil engineering group, said that infrastructure investment in the region is running at around 3% of GDP, whereas it should be at around 5%. McKinsey’s, a consultancy, calculates that if Latin America’s medium-income countries had infrastructure as good as that of Turkey or Bulgaria, their economic growth rates would be two percentage points faster than they are right now. Put simply, everything indicates that the region’s infrastructure is lagging behind.