Prof. Harry T. Dimitriou – The Global Infrastructure Gap, Political Risks and Public-Private-Partnership Responses: An examination of 21st Century challenges
A recent World Economic Forum (WEF) publication indicated that the current infrastructure investment gap in emerging and developing economies is estimated between US$1 and 1.2 trillion and way beyond the capacity of governments, aid agencies and Multi National Development Banks (MDBs) to deliver. With climate change and natural disasters, plus post conflict retrofitting needs, this estimate is likely to be much greater. The same source concluded that the immensity of the challenge deserves new approaches to infrastructure investment of transformational megaprojects in particular, especially in a context of increasing political and economic volatility, and the general uncertainties these generate, not to mention those uncertainties spawned by climate change and other environmental outcomes that have political and governance consequeces.
Given the above, an increasingly important concern is how effective, appropriate and resilient are the international financial community’s approaches that focus on the political risks involved in seeking to bridge this global infrastructure investment gap. Quite apart from the suitability of such approaches to contemporary times and the varied political and governance contexts of the world, this is important since where such instruments do exist there is evidence to suggest they are not being broadly employed.
This seminar seeks to provide some very preliminary insights into the above to issues. This is done in the context of looking at the implications of infrastructure investors increasingly being pushed to achieve more profitable short term returns linked to political cycles rather than long term outcomes, and the increasing role of public-private partnerships (PPPs) in delivering such projects. It reports on selected findings of cursory research undertaken by the author that investigated how such investors could reduce political risks associated with mega infrastructure project investments delivered through PPPs with a view to ultimately safeguarding and enhancing project outcomes both in the short-run and long-term for key stakeholders in a sustainable way, with some limited attention given to the possible creation of a global risk-mitigation facility that seeks to safeguard project investors against contract breaches; this being a long-standing aspiration of many private sector infrastructure leaders.