With $3.2 trillion and a willingness to change, we can have a resilient, sustainable, and equitable future
Last week, the GI Hub launched our newest resource, Transformative Outcomes Through Infrastructure. Its purpose is to uncover the G20 priorities that underlie the USD3.2 trillion of infrastructure investments announced post-COVID, and to help direct future spending into areas that could yield the greatest possible benefits for people and the planet.
With this resource, we are making available data that we collected collaboratively with G20 governments and sharing insights on how G20 governments are using infrastructure to achieve transformative outcomes post–COVID-19. This information will help governments, investors, multilateral development banks, and project directors across the public and private sectors develop future infrastructure packages with transformative outcomes in mind.
As we launch this initiative, what began as an analysis of how governments could use the COVID-19 recovery to achieve positive economic and social outcomes has revealed itself to be even more timely and relevant than expected, especially in the context of the various national pledges to net zero and the ever-growing attention on digitalisation, connectivity, circularity, and affordability in infrastructure.
Why did we need this resource? The scale of opportunity after COVID-19 is almost unprecedented – and so is the need
The infrastructure landscape changed rapidly after COVID-19, and governments needed an immediate reference point to enable better decisionmaking. An unprecedented level of fiscal stimulus was deployed after COVID-19 started, resulting in a reduced fiscal space that has forced governments to divert their budgets into urgent areas such as healthcare and social protection. As a result, infrastructure as a stimulus was slow to emerge in the early days of the pandemic; however, an analysis of the G20’s stimulus packages over the last 18 months has demonstrated substantial commitment by G20 governments to infrastructure investments for COVID-19 recovery.
Between February 2020 and August 2021, G20 governments announced USD3.2 trillion in infrastructure as a stimulus, the equivalent of 3.2% of GDP across G20 member and guest economies. This is substantial compared with the total stimulus deployed during the Global Financial Crisis (GFC) of 2007-08, which was USD2 trillion, roughly 1.4% of GDP. If this infrastructure as a stimulus is spent in the next two years, it would be a 45% increase in yearly infrastructure investment compared with 2019 levels.
The boost to infrastructure investment is sorely needed. The pandemic increased inequalities among vulnerable people and highlighted gaps in access to financing and services in every country. Simultaneously, the climate crisis is still at ‘code red’. It remains urgent for the sector to confront its contributions to climate change and embrace the positive impact by adopting more green and circular infrastructure.
Yet, investment alone is an incomplete solution. Governments cannot afford to continually increase spending. In April 2021, public debt levels across G20 economies were 50–100% higher than they were following the GFC. In thinking about transformative outcomes through infrastructure, governments can leverage the private sector demand for ESG outcomes to mobilise private investment in infrastructure. In this context, innovative financing and delivery models start to play a role in achieving transformation.
From every vantage point, it is clear that we need to get the most possible out of the unprecedented level of infrastructure as a stimulus.
Getting the most from infrastructure as a stimulus means pursuing transformative outcomes
The infrastructure sector needs to make a fundamental shift from built solutions that address singular problems to those that address multiple transformative outcomes. Transformative outcomes are those that have the greatest impacts on our most pressing global challenges, including the climate crisis, social inequality, adaptability, and resilience.
All infrastructure as a stimulus can create jobs and economic growth, and a 2020 GI Hub study that found the economic multiplier for public investment (including infrastructure) is 1.5 times greater than the initial investment in two to five years – much higher than other forms of public spending.
Targeting of transformative outcomes should, in addition to creating better social and environmental outcomes, result in an even greater economic multiplier and help close the infrastructure gap. For example, recent GI Hub analysis found that technological innovation could fill 60% of the infrastructure investment gap if rolled out at scale.
Transformative outcomes are achievable
Achieving transformative outcomes is possible. Our Transformative Outcomes Through Infrastructure resource contains examples of infrastructure as a stimulus packages in G20 countries that are targeting transformative outcomes, which can be used as templates to create stimulus packages or structure projects for transformative outcomes. We have also curated a library of reference documents, following a comprehensive literature search, that is full of ideas and guidance for targeted transformative outcomes through national and local infrastructure. All of these are underpinned by the InfraTracker, which shows data on how stimulus is being applied by country, sector, subsector, and targeted outcomes.
We encourage you to explore the resource, and contact us with questions or feedback or to contribute or collaborate. We are inviting collaboration with public and private sector organisations and individuals to extend our work and advance transformative outcomes through infrastructure. We welcome your ideas.
In April 2021, the IMF’s Fiscal Monitor reported a total of USD17 trillion of key fiscal measures for the G20 (including member and guest economies) since January 2020. This represents approximately 20% of the G20 GDP.