CSIS – 17 june 2021
|by Matthew P. Goodman and Jonathan E. Hillman
G7 leaders unveiled an initiative to support global infrastructure, launched as China’s Belt and Road Initiative pulls back. To succeed, the United States and its partners must design incentives that mobilize private capital and appeal to leaders in the developing world.
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|As the list of countries participating in the BRI has ballooned, the resources being made available to those countries have plummeted. The Covid-19 pandemic has further increased needs in the developing world while reducing the ability of many countries to borrow.
While remaining steady as China’s BRI has declined, the G7’s combined assistance is only a fraction of what the developing world needs. Developing Asia alone will require $26 trillion in infrastructure investment through 2030, according to the Asian Development Bank.
The private sector is where the untapped financial firepower resides. If G7 countries realized the International Finance Corporation’s mobilization target of 80 percent, current levels of assistance would unlock more than $200 billion over five years.