Former World Bank Chief Economist Nicholas Stern on Monday said the next 20 years will be decisive in the world history and there is need to have “robust policy” and “good governance” to provide clear and convincing signals.
“The world infrastructure will double in the next 15 years. The world economy will double in the next 20 years and the population in cities and towns will double in the next 40 years,” said Stern, IG Patel Chair of Economics and Government, London School of Economics. “The next 20 years will be decisive in the world history… (it offers) deep esponsibility as well as great opportunity.”
“Despite the central importance, countries are unable to deliver on the quality and quality of the investment needed. The failure to deliver on scale and sustainability of infrastructure investments reflect on two fundamental gaps,” he said while addressing an event organised by the Asian Infrastructure Investment Bank (AIIB) here. “There is need to have robust policy and institutional foundation, including good governance that can provide clear and convincing signals,” Stern said.
“Multilateral development institutions will play crucial role in helping international collaboration, country strategies and policies, country platforms, the right kind of finance at the right time and right private sector multipliers,” Stern said. A large chunk of infrastructure investments will be in Asia, in sectors like telecom, port and transport.
Elaborating on the theme of sustainable infrastructure, Stern said sustainable infrastructure is crucial and lies at the core of inclusive growth, the sustainable development goals and climate change. Moreover, it is vital that we consciously make an effort to seize this narrow window of opportunity in the next two decades to ensure that we meet the targets of the Paris agreement. Stating that “we need to overcome the obstacles we are currently facing” in infrastructure development, he was hopeful of translating potential projects into new investment opportunities.
As much as 70 per cent of carbon emissions are connected to infrastructure and about 70 per cent of investment opportunities come from Asia, he said. Stern Review Report on the Economics of Climate Change, produced by a team led by Stern — released in October 2006 — says that climate change is described as an economic externality. Stern subsequently referred to the climate change externality as the largest ever market failure.