Restarting growth

Belt and Road Initiative can help Latin America close its infrastructure gap

A key topic of the upcoming Summit of the Americas to be held in Los Angeles, California, from June 6 to 10, should be the reactivation of Latin American economies, which have been badly hit by the COVID-19 pandemic. According to the United Nations Economic Commission for Latin America and the Caribbean, the year 2020, the first year of the pandemic, was the worst economic crisis Latin America has experienced in 120 years.

A vital component of this reactivation will be the efforts to upgrade the region's infrastructure, which are badly in need of a shot in the arm. According to the report "The Infrastructure Gap in Latin America and the Caribbean: Investment Needs Through 2030 to Reach the 2030 Development Goals", released by the Inter-American Development Bank in December 2021, this deficit amounts to $2.2 trillion, and the region needs to invest $150 billion a year to overcome it. The approach followed by many Latin American governments on the subject has been scattershot and unsystematic, yet the region depends heavily on its exports and the need to invest in infrastructure to get its products to port is especially urgent.

According to another IDB report, "From Structure to Services: The Path to Better Infrastructure in Latin America and the Caribbean" released in 2020, infrastructure investment in Latin America and the Caribbean from public and private sources, averaged just 2.8 percent of their combined GDP from 2008 to 2017.This is well below the average of regions such as East Asia and the Pacific (5.7 percent), the Middle East and North Africa (4.8 percent) and South Asia (4.3 percent). In recent years, investment in infrastructure in LAC countries has fallen to 2 percent of GDP.

China's Belt and Road Initiative can play an important role in overcoming this deficit, as it puts infrastructure and connectivity front and center.

Launched in 2013 by President Xi Jinping, the initiative has led to the completion of many significant projects, including, most recently, the China-Laos railway, from Vientiane all the way to China's Yunnan province, 76.5 percent of which had to be built via tunnels and bridges, a real engineering feat. Other major projects have been completed in Pakistan, Ethiopia, Kenya and other countries in the developing world.

From its initial conception, the Belt and Road Initiative has evolved into a development proposal for the Global South. It puts at its center the notion of leveraging infrastructure and connectivity, both physical and digital, to trigger local and regional economic growth and business opportunities.

And this is what Latin America finds especially attractive about the Belt and Road Initiative. In May 2017, two Latin American presidents, Michelle Bachelet of Chile and Mauricio Macri of Argentina, attended the First Belt and Road Initiative International Cooperation Forum, held in Beijing. As of this year, 21 LAC countries have signed memorandums of understanding with China on the Belt and Road Initiative, the latest of which was Argentina during the state visit of President Alberto Fernandez to China in February for the opening of the Olympic Winter Games. Six South American countries have also become full members of the Asian Infrastructure Investment Bank: Argentina, Brazil, Chile, Ecuador, Peru and Uruguay.

The Belt and Road Initiative, with its emphasis on greater state-led initiatives and a greater role for public policies, brings to bear a different development perspective on what development is all about, embodying an alternative to more traditional perspectives.

Some critics argue that Latin America does not need the Belt and Road projects, and embarking upon them will lead to the building of "white elephants", and falling into the so-called debt trap diplomacy. This is not true. Without appropriate public policies, no infrastructure will be built. Bridges and tunnels do not build themselves.

And the infrastructure deficit in Latin America, as pointed out above, is significant. Utility services such as water, telecommunications and electricity suffer frequent interruptions. And according to the World Bank Logistics Report 2018, countries in the region do not score well on logistic performance indicators.

The Belt and Road Initiative is an opportunity to upgrade Latin American infrastructure, and to bring it up to speed with the development needs of the new century and the digital age.

The author is a research professor at the Frederick S. Pardee School of Global Studies at Boston University, a Wilson Center global fellow and a former Chilean ambassador to China. The author contributed this article to China Watch, a think tank powered by China Daily.

The views do not necessarily reflect those of China Daily.

Contact the editor at editor@chinawatch.cn