Estimating Demand for Infrastructure in Energy, Transport, Telecommunications, Water, and Sanitation in Asia and the Pacific: 2010-2020

Abstract

Infrastructure plays a key role in promoting and sustaining rapid economic growth. Properly designed infrastructure can also make growth more inclusive by sharing its benefits with poorer groups and communities, especially by connecting remote areas and small and landlocked countries to major business centers. Even if the Asia-Pacific region has witnessed progress in infrastructure development, the growth of infrastructure lags behind its economic growth, and also behind international standards of infrastructure quantity and quality. Inadequate infrastructure can hamper the potential economic growth of Asian countries, weaken their international competitiveness, and adversely affect their poverty reduction efforts.

The circumstances and effects of the recent economic and financial crisis provide a number of reasons to further develop national and regional infrastructure in Asia. Among these reasons is that regional infrastructure enhances competitiveness and productivity, which could help in economic recovery and in sustaining growth in the medium to long-term. Regional infrastructure also helps increase standard of living and reduce poverty by connecting isolated places and people with major economic centers and markets, narrowing the development gap among Asian economies.

This paper estimates the need for infrastructure investment, including energy, transport, telecommunications, water, and sanitation during 2010-2020, in order to meet growing demands for services and facilitate further rapid growth in the region. By using “top-down” and “bottom-up” approaches, this paper provides a comprehensive estimate of Asia’s need for infrastructure services. The estimates show that developing countries in Asia require financing of US$776 billion per year for national (US$747 billion) and regional (US$29 billion) infrastructure during 2010-2020 to meet growing demand.

Keywords: Asia-Pacific infrastructure, regional infrastructure, infrastructure development

JEL Classification: L9, O1, O2, R11, R4