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Infrastructure is a key stimulus for economic growth and a measure of global competitiveness.
In an increasingly connected world, our decaying infrastructure threatens the competitiveness of American employers, from our multinational manufacturers to the small businesses that are the bedrock of our communities. Unfortunately, today, America’s investment in infrastructure pales in comparison to the investments made by other countries across the globe. China spends almost four times what we do as a share of their total economy; India spends three times as much. And it is not just developing countries that are stepping up to meet their nations’ demands for infrastructure. In countries like Spain and France, too, significant investments are being made to maintain and replace fifty-year-old roads, water pipes, and sewer systems.
As Washington debates an economic stimulus package to head off the recent downturn in the economy, we should all be reminded of the types of long-term infrastructure investments that led to America’s unprecedented growth in the 1940s, 1950s, and 1960s. These investments not only created jobs, they built a foundation for future economic prosperity. Infrastructure isn’t cheap. But given how vital it is to the country’s economy, the choice is between continuing to rely on aging infrastructure or to aggressively invest for the next generation.
Global Competitiveness
Although it may not indicate the necessary level of infrastructure investment, it is nonetheless useful to compare public infrastructure spending as a share of GDP, as infrastructure investments and economic growth are correlated.
America is falling behind both developed and developing countries in tackling its infrastructure problems.
In the developed world, countries like Ireland have significantly invested in basic infrastructure, such as fiber-optic telecommunications networks and dedicated business technology parks, to spur growth. Elsewhere in Europe, although direct public expenditures have decreased, governments in the United Kingdom and France have aggressively leveraged the private sector to maintain and build their roads, schools, and water networks. For example, in 2005, public-private partnerships totaled $55 billion in the United Kingdom, which represented 16 percent of total infrastructure spending that year.
In the developing world, where lack of infrastructure has proven to be a key constraint to economic growth, countries like China and India are taking an even more aggressive stance, spending 9 percent and 8 percent of their annual GDP, respectively, on infrastructure investments. The nations of sub-Saharan Africa are also collectively responding to the need for rapid investment, spending an average of 4.7 percent of the continent’s total GDP annually.
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