In Latin America, deficiencies in the coverage and quality of economic infrastructure—such as long-term physical structures, equipment, and facilities for supplying energy, transport, telecommunications, water, and sanitation services to productive sectors and households—pose significant barriers to sustainable and inclusive economic growth, as well as to the achievement of internationally agreed development goals (i.e., the Sustainable Development Goals, including poverty eradication, improved education, employment, health, and reduction of environmental pollution impacts). Evidence from the region indicates that basic service provision has not yet met all demands: in 2014, 18.5 million people in Latin America lacked access to electricity; in 2015, 24 million lacked improved drinking water sources, and 90 million lacked improved sanitation facilities. Additionally, a large volume of existing infrastructure services functions poorly, potentially becoming a bottleneck for sustainable growth. Examples include daily traffic congestion; occasional or frequent interruptions in water, electricity, and telecommunications services; floods caused by insufficient investment in new facilities or upgrades to old water infrastructure; and negative environmental impacts from infrastructure using “non-clean” technologies or outdated systems. Given UN population projections indicating 86 million more people in the region over the next 15 years, current infrastructure—both in quantity and quality—is insufficient to meet demand, a concern compounded by the region’s growth needs.
While infrastructure investment in the region has improved over the past decade in terms of supply (coverage), quality, sub-sector allocation, and procurement procedures, structural imbalances persist and even intensify. These imbalances reinforce a low-diversification production structure, lagging innovation efforts and performance, high concentration of income and wealth, and acute vulnerability of populations to climate change (CEPAL, 2016). Insufficient infrastructure investment largely explains the existing gap: as shown in data from numerous studies and regional development agencies, infrastructure investment in Latin America falls short of the levels recommended to meet the region’s socio-economic development needs, often failing to reach the advised benchmarks. These challenges are exacerbated by constrained public resources and budget limitations tightly linked to commodity price fluctuations.
As Latin American countries seek to expand financing channels for infrastructure, the potential of Chinese funding cannot be overlooked. China is a major global and regional economic and financial actor, as well as the origin of large construction firms active both domestically and internationally. In particular, Public-Private Partnership (PPP) models in infrastructure have long served as a key vehicle for investment in the region and are now among the most popular mechanisms for attracting Chinese private investment.
To sustain private sector engagement, robust and stable regulatory frameworks are essential, alongside improved decision-making and implementation processes to align Latin America’s infrastructure needs with China’s financing capacity. This alignment is critical to achieving a qualitative and quantitative leap in infrastructure contributions, thereby promoting sustainable development in the region.
Against this backdrop, this report provides data and analysis on China’s potential role in Latin American infrastructure development from two dimensions: (1) an overview of the region’s infrastructure investment needs and its historical experience with PPPs; and (2) China’s current capabilities and potential in delivering PPP projects. The overarching goal is to propose actionable recommendations: on one hand, for Latin American countries to refine infrastructure policies and PPP frameworks to attract and facilitate Chinese investment; on the other hand, for Chinese enterprises to develop business strategies for successful entry into and integration with Latin America’s infrastructure PPP market.
Research Team
Pablo Chauvet, Chen Taotao, Azhar Jaimurzina, Xu Run, Jin Ying
Access the English Version
The full report is available for download via the official website of the United Nations Economic Commission for Latin America and the Caribbean (ECLAC):
https://repositorio.cepal.org/bitstream/handle/11362/45205/1/S1900859_en.pdf
