Financing Sustainable Infrastructure in the Americas
Latin America and the Caribbean (LAC) has achieved considerable social and economic progress in the past three decades, but still lags behind many other parts of the world when it comes to key infrastructure areas – including sanitation, telecommunications, transportation and energy. These infrastructure gaps are now proving to be hurdles for productivity and competitiveness, which in turn threatens continued sustainability of growth paths.
A working paper by Rogério Studart and Luma Ramos analyzes the challenges and potentials of LAC national development banks in playing a role in closing the infrastructure gaps with climate-smart investments. The authors focus primarily on the Brazilian case, as it is a particularly dramatic example where sustainable infrastructure investments may be critical for the future. Brazil is already the eighth largest economy in the world and has achieved remarkable poverty reduction, but still has an infrastructure gap that lags behind other nations.
The authors present a regional overview of both the infrastructure financing gaps and of development banks. They analyze Brazil and its current role with the Brazilian Development Bank (BNDES) as a main long-term financier. The paper illustrates the potential role of development banks in general, and BNDES in particular, can have in expanding sustainable infrastructure financing and crowding-in finance. The authors describe that, although there are significant challenges, creating a sustainable infrastructure financing architecture may contribute to improving the existing dysfunctional infrastructure and paving the way towards a more sustainable path.