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Hi all,
An article from the Economist - Record spending on infrastructure will help to sustain rapid growth in emerging economies. Excerpts:
THE biggest investment boom in history is under way. Over half of the world`s infrastructure investment is now taking place in emerging economies, where sales of excavators have risen more than fivefold since 2000. In total, emerging economies are likely to spend an estimated $1.2 trillion on roads, railways, electricity, telecommunications and other projects this year, equivalent to 6% of their combined GDPs—twice the average infrastructure-investment ratio in developed economies.
Good infrastructure has always played a leading role in economic development, from the roads and aqueducts of ancient Rome to Britain`s railway boom in the mid-19th century. But never before has infrastructure spending been so large as a share of world GDP. This is partly because more countries are now industrialising than ever before, but also because China and others are investing at a much brisker pace than rich economies ever did.
Infrastructure investment can yield big economic gains. Building roads or railways immediately boosts output and jobs, but it also helps to spur future growth—provided the money is spent wisely.
A recent report by Goldman Sachs argues that infrastructure spending is not just a cause of economic growth, but a consequence of it. As people get richer and more of them live in towns, the demand for electricity, transport, sanitation and housing increases. This mutually reinforcing relationship leads to higher investment and growth. The bank has developed a model that uses expected growth in income, urbanisation and population to forecast future infrastructure demands.
http://www.economist.com/finance/economics...ory_id=11488749
Keith
An article from the Economist - Record spending on infrastructure will help to sustain rapid growth in emerging economies. Excerpts:
THE biggest investment boom in history is under way. Over half of the world`s infrastructure investment is now taking place in emerging economies, where sales of excavators have risen more than fivefold since 2000. In total, emerging economies are likely to spend an estimated $1.2 trillion on roads, railways, electricity, telecommunications and other projects this year, equivalent to 6% of their combined GDPs—twice the average infrastructure-investment ratio in developed economies.
Good infrastructure has always played a leading role in economic development, from the roads and aqueducts of ancient Rome to Britain`s railway boom in the mid-19th century. But never before has infrastructure spending been so large as a share of world GDP. This is partly because more countries are now industrialising than ever before, but also because China and others are investing at a much brisker pace than rich economies ever did.
Infrastructure investment can yield big economic gains. Building roads or railways immediately boosts output and jobs, but it also helps to spur future growth—provided the money is spent wisely.
A recent report by Goldman Sachs argues that infrastructure spending is not just a cause of economic growth, but a consequence of it. As people get richer and more of them live in towns, the demand for electricity, transport, sanitation and housing increases. This mutually reinforcing relationship leads to higher investment and growth. The bank has developed a model that uses expected growth in income, urbanisation and population to forecast future infrastructure demands.
http://www.economist.com/finance/economics...ory_id=11488749
Keith