MENA Infrastructure: $1 Trillion Only Hints at Its True Impact

MENA Infrastructure: $1 Trillion Only Hints at Its True Impact

November 28, 2013 at 05:11pm

There’s lots of discussion about infrastructure development in the region, with huge figures, from $1 trillion to more than $4 trillion. The reality is that the impact of infrastructure is as astounding as the numbers.­­

Ambassador Karan Bhatia, GE’s Vice President for Global Government Affairs & Policy, outlined how important infrastructure is to sustainable, long-term growth during a recent presentation to students, faculty, staff and other stakeholders at Masdar Institute.

He said that the World Bank found that every additional 1% of world GDP spent on infrastructure increases global GDP by 2%, while the impact on GDP growth in developing countries is a much larger 7%. A McKinsey & Co study, he said, showed that by increasing national infrastructure investment by 1% of GDP, India would create an additional 3.4 million jobs, The United States would add 1.5 million jobs, and Indonesia would generate 700,000 new jobs.

On the features of this new “age of infrastructure,” Bhatia said the private sector will play a bigger role, given a paradigm shift in how infrastructure is built and financed and the constraints on government budgets. He said governments can attract the private sector’s investments “through a clear commitment, speedy regulations, transparent procurement processes and through a talented workforce.”

He said there is tremendous potential for partnership between Masdar and GE in the areas of renewables and energy efficiency, where technologies are well tested, the business cases are strong and the benefits to Abu Dhabi are substantial.

Bhatia also highlighted a geographic shift that will see emerging and developing economies account for 40-50% of all infrastructure spending over the next 18 years, compared with the past 18 years, when they accounted for only 30% of the global total.

For more on Ambassador Bhatia’s presentation, click here. For more on GE’s support to infrastructure and renewable energy development in the region, click here.

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