Today the world invests some $2.5 trillion a year in the transportation, power, water, and telecom systems on which businesses and populations depend. Yet this amount continues to fall short of the world’s ever-expanding needs, which results in lower economic growth and deprives citizens of essential services. Too many countries—emerging and advanced economies alike—have paid insufficient attention to maintaining and expanding their infrastructure assets, creating economic inefficiencies and allowing critical systems to erode. Epic traffic jams, bottlenecked ports, blackouts, deteriorating dams, and tainted water supplies are clear signs that the world’s infrastructure needs cannot be deferred indefinitely. Glaring gaps exist in the developing countries of South Asia and Latin America but also in the United States and other advanced economies.
The McKinsey Global Institute (MGI) tackled this issue in a comprehensive 2013 report that quantified the world’s future investment needs and warned of looming shortfalls. But it also showed that a better flow of finance, combined with measures to improve project selection, delivery, and operations, could close those gaps. This research, Bridging Global Infrastructure Gaps, reviews the latest data on infrastructure spending across countries and asset classes, updates projections of infrastructure needs, and pinpoints the gaps. It discussed steps that could unlock more funding from public coffers as well as private corporate and institutional investors. The report concludes by showing that making spending more efficient through better management can be even more important than finance. It also offers new insights into how economies around the world can move in this direction, using a diagnostic that assesses infrastructure programs on key dimensions.