By Nils Smedegaard Andersen, Chief Executive Officer of A.P. Møller-Mærsk A/S and speaker at the 46th St. Gallen Symposium.
Investment in infrastructure can be an important catalyst for economic growth. It reduces distance to markets, lowers total cost of trade and raises the economic productivity and competitiveness of countries and regions.
Lack of investments in infrastructure since the 1980s is leading to infrastructure and growth deficits in both mature and emerging markets. This and evidence of bottlenecks in emerging and developing economies, and the sluggish global economic recovery, have spurred calls for a step-up in infrastructure investment.
An increase in infrastructure spending and financing in the region of USD 1-3 trillion per year may be needed over the next 15 years.
Today, one third of the annual spend on infrastructure globally stems from private companies. On average, infrastructure investments have a bigger growth impact when private companies are involved with the potential to double the growth impact for every dollar spent. Private companies can play an even larger role, not least in helping governments to realize efficiency savings, and thereby helping to ensure that the infrastructure bill does not exceed end-users' ability to pay.
Activating infrastructure investments from private companies will support the push to raise global growth outlooks and standards of living. The primary incentives are to ensure long-term partnerships between governments, financiers and private companies, a broader public-private cooperation and best practice.