Asia Can’t Get Enough Infrastructure
In the fourth episode of Rethinking Asia, we interviewed Matthew Goodman, the William E. Simon Chair in Political Economy at the Center for Strategic and International Studies (CSIS). At CSIS, he leads the Reconnecting Asia program, which tracks how infrastructure is shaping economic and geopolitical realities in Asia.
Our discussion touched on Asia’s huge demand for new infrastructure and the complex geopolitical tensions among regional and multilateral actors. Matthew addressed how countries deal with the risks associated with these large projects and unpacked the role of national strategy, including China’s Belt and Road Initiative. Some of our key takeaways include:
- The Asian Development Bank estimates that between 2016 and 2030, Asia needs $26 trillion of infrastructure investment to reduce poverty and expand growth.
- International investors see infrastructure projects as a source of long-term return, but often must contend with underlying issues of corruption, land rights, and political risk.
- While donor countries seek to lead infrastructure projects to gain commercial or geopolitical benefits, recipient countries pursue projects for growth and domestic political support.
- Japanese banks lead the world in infrastructure financing, but recent Chinese efforts—the Belt and Road Initiative and the Asian Infrastructure Investment Bank—are expanding trade connections and raising China’s profile in developing countries.
- Most global trade currently takes place via sea, but improved land-based transportation infrastructure in Asia may mean more commerce travels over upgraded freight and truck networks.
- To plan and finance physical infrastructure, countries also need many forms of soft infrastructure, like functioning capital markets, customs procedures, credible legal and regulatory regimes, and human capital.