My guest on the Wonkcast this week is Scott Morris, a senior associate here at CGD and former deputy assistant secretary at the US Treasury, where he oversaw US ties with the multilateral development banks.
Scott recently led a study group of CGD colleagues and outside experts that reviewed G-20 efforts to increase financing for infrastructure in developing countries. The group produced a short note proposing five new deliverables for the G-20 on infrastructure finance. (See Scott’s blog post with Madeleine Gleave for an even shorter version.)
We begin our chat by discussing why the G-20 has consistently reaffirmed its interest in infrastructure finance.
"From a development perspective, infrastructure is what countries need to take off. It's not just roads and bridges,” Scott explains. “It's also energy needs and clean water. It's about powering industry."
We then discuss the difficulties the G-20 faces (lacking a secretariat to actually carry out any decisions) and strengths (convening power and the ability to effectively offer instructions to the international financial institutions, since the G-20 members constitute a large majority of the shareholders).
The five recommendations in the study group note are carefully designed to make the most of the G-20 strengths. We discuss three (excerpted below from Scott and Madeleine’s blog post):
- Commission a new global knowledge product for infrastructure investment, the “Investing in Infrastructure” survey. While “Doing Business” and other surveys have done a good job informing us how the lack of roads, ports, etc. are barriers to growth, this country-level survey would identify policy and regulation changes that could ease the challenges of actually investing in and building that infrastructure.
- Cultivate a new generation of infrastructure investors by launching a sustained engagement with the pension fund community. With the long term investment horizon of pension funds and the long term returns of infrastructure projects, the two are a good match to meet development goals. But so far, a lack of practical engagement has left the estimated 20.7 trillion managed under pension funds untapped.
- Make a sustained commitment to the multilateral development banks. The emphasis on private sector involvement should not come at the cost of core support to the MDBs. Revisiting a one-time commitment to capital increases and coordinating on policy agendas could renew the effective leveraging of MDB capital for infrastructure.
Listen to the Wonkcast for more. Comments welcome below.
My thanks to Kristina Wilson for recording and editing the Wonkcast and to Aaron King for a draft of this blog post.