Transportation infrastructure development in Latin America and the Caribbean has failed to keep up with growing urbanization and has bypassed many rural areas altogether.
In a region where more than 80 percent of people live in cities—a figure expected to reach 90 percent by 2050— urban areas have been especially hard-hit. Low-quality public transit systems are failing to meet demands, and aging bus fleets are polluting the environment.
Meanwhile, people in rural and suburban areas often miss out on work opportunities because of poor transportation connections. Badly designed and maintained highways lead to unnecessary and tragic accidents.
Unreliable infrastructure also hampers the ability to deliver services and move commercial cargo. A global economy demands the modernization and integration of highways, railways, seaports and airports.
Developing adequate infrastructure is costly. The IDB has estimated that countries in the region would need to roughly double their current infrastructure investment, to around 4-6 percent of GDP, and maintain that level for over 20 years to catch up to the median East Asian country. Evidence suggests that doubling infrastructure investment could increase GDP growth by as much as 2 percent per year, according to the IDB.
Traditionally, infrastructure assets have been planned, operated and managed by the public sector, whether at the national, provincial or local level. Fiscal limitations, economies of scale and innovation needs have prompted many governments to look to public-private partnerships as a more sustainable alternative for some of these costly long-term investments.