Infrastructure Deficit

Latin American countries have invested heavily in building infrastructure, improving connectivity and utilities considerably. However, large income gaps remain, and population growth and urbanization put additional pressure on current capacity.

Infrastructure (including both transport and utilities) boosts competitiveness and inclusiveness by increasing efficiency gains from trade and specialization, reducing transaction costs, access to markets and providing opportunities to people to reach better job and better goods and services.

Infrastructure improvements are needed for connecting people to markets. The heterogeneity in quality of infrastructure leads to inequality in productivity and growth also leading to inequalities in country capacity to reduce inequality.

Looking forward, the challenge for Latin America infrastructure is not only to close its current capacity gaps, but also to prepare for an increase in demand for transport, electricity and water services as the economies develop.

Integration can help achieve efficiency in infrastructure services supply. For example, connecting the energy grid and hydropower from Andean countries is supplying substantial electricity to neighbouring countries, and could expand capacity to provide power to meet increasing demand.