One of the key challenges facing developing nations is the lack of available infrastructure. Proper infrastructure can help a country build itself up by improving health, transportation, energy, education and a myriad of other vital institutions. Global infrastructure initiatives are a vital form of potential aid that can improve the quality of life for developing nations.
How Energy Infrastructure Helps Emerging Countries
USAID currently works around the world to improve the infrastructure of developing nations. In Afghanistan, the organization helped develop a national electric company that reduced energy loss in the country from 60 percent to 35 percent. Likewise, in the Philippines, USAID was integral in providing energy to 13,000 rural households via solar and hydroelectric plants. Similar projects are taking place in countries such as Jordan, Vietnam and the Ukraine.
Infrastructure is important to a country’s development because without it growth becomes difficult. Without the energy to power development projects of their own, foreign aid ends up catalyzing a nation to empower itself. By providing clean water, countries can save on healthcare costs and invest in other issues. This makes infrastructure one of the most cost-effective ways to invest in the future of a country.
How It Can Be Improved
Unfortunately, there’s a gap between infrastructure development funding needs and its availability. Erecting fundamental structures and corruption are both costly and difficult projects for governments to overcome.
In order to combat these issues, some experts have suggested acquiring funding from the private sector so as to help aid some of USAID’s massive energy project proposals. The theory is that by selling projects to private contractors, governments can cut costs and prevent corruption. However, others such as W. Gyude Moore suggest that actions like these do not resolve the core issues. In either case, it will take a combination of private investors and foreign aid to solve the problem for good.
According to Moore, there are a few key things to keep in mind while thinking about global infrastructure.
- Not Every Country is the Same: It seems obvious, and yet current global infrastructure planning could do a better job of differentiating between countries. The G20 Global Infrastructure Hub Pipeline aims to help alleviate this problem by providing investors with comprehensive data on each project. With unique and accurate information, investors will be able to better match their skills and resources with each project.
- Private Investment is too Risky in its Current Form: With imperfect information and little standardization, many investors stay away from global infrastructure initiatives unless they can be guaranteed a profit from governments; this issue is then also combated by the G20 Global Infrastructure Initiative. By providing comprehensive information, investors can better prepare for their jobs, thereby reducing costs for themselves and the governments they work with.
- Different Types of Infrastructure are More Profitable than Others: While energy infrastructure attracts a large number of investors, more fragile sectors like water and transportation do not. Part of USAID’s infrastructure initiative is to help build these important systems. In Jordan, these efforts supported a water treatment plant that now provides clean water to two million citizens.
While tough challenges do exist for foreign infrastructure in the future, progress can be made via a combination of foreign aid and private sector investment. USAID is currently working to help foreign governments establish infrastructure, and the G20 Global Infrastructure Hub Pipeline helps investors make informed decisions. While there is always more that can be done in regard to global infrastructure, this is a promising start.
– Jonathon Ayers