By 2040 the world is projected to face a 15 trillion dollar infrastructure gap. Infrastructure boosts economic growth, competitiveness and enhances global connectivity and trade flows: but in the long run, the widening gap may harm the global economy, reducing growth potential and increasing disparities between developed and less developed countries, between urban and rural areas.
Is the European economy fit to fight against the giants of globalized markets? Even though market concentration increased after the liberalization of the 1990s, according to some, European firms are too small to compete successfully. Public authorities can favour the creation of “champions” through industrial policies or simply by guaranteeing an undistorted competition in wider and liberalized markets. In this commentary we cast light on EU industrial policy and its relationship with competition policy.
The evolution of the digital world and digital services has advanced enormously in the last decade. The transition towards a comprehensive digital government able to cope with the innovation of the industry 4.0 (soon 5.0) requires substantial investments to modernize the government sector and the economy marked by such evolution. Increasing budgetary constraints in governments, unable to cope with the fast-growing development of digital products, have supported the integration of the public-private partnership model.
To keep pace with the global connectivity needs and the projected GDP growth, it is estimated that the world should invest an average of $3.7 trillion annually through 2035 in economic network infrastructure only, with the electrical industry accounting for 29% of the total investment.
Humanity’s critical dependence on outer space and its infrastructure becomes most obvious in moments of tensions or crises, such as the anti-satellite test conducted by China in 2007.
Sustainable infrastructure is a powerful tool for achieving inclusive growth. But it is an expensive one. USD 6.3 trillion of investment in infrastructure is required annually on average up to 2030 to support economic growth and the broader development agenda linked to the United Nations Sustainable Development Goals (SDGs).
New technologies can advance project outcomes in the construction industry. Governments are well-poised to cultivate greater adoption.
Smart infrastructures require governance, specifically governance of intelligence and intelligence-enabled control. For example, in some very important respects, smart infrastructures should be dumb and that will take governance. One way to quickly see the point is by way of analogy to the Internet and the decades-long and still ongoing debate about network neutrality. The end-to-end architecture of the Internet and open Internet regulation govern certain uses of intelligence and thus intelligence-enabled control by infrastructure owners.
Because of its role as an important driver of both economic and productivity growth, development and maintenance of infrastructure network are usually a major concern to political agenda. Nevertheless, there is a widespread agreement that the current investment trend may not be sufficient to meet a constantly growing demand for infrastructures, driven by the rapid development among emerging markets. Estimates by Oxford Economics point to a structural gap that, from its 2016 level of USD 372 bln, will face an yearly average growth of 3.2% until 2040.
This study is an initiative of the ISPI’s Centre on Infrastructure, promoted with the knowledge partnership of McKinsey & Company. It analyses the importance of economic infrastructure and how to finance and develop it. Economic infrastructure is the backbone that, in many cases, crosses the borders of political geo- graphy and defines the space supporting the movement of goods, services, people and their ideas.