A High Risk Global Infrastructure Agenda: the Role of Multilateral Development Banks

As vast expenditures in infrastructure megaprojects are increasingly justified as a means to enhance the life of communities and stimulate economies, Multilateral Development Banks together with the International Monetary Fund have never been so united than in the arena of large infrastructure financing.

Indeed, while the mostly Western-led MDBs intensified their collaboration on infrastructure and sustainable development, the same model is spreading worldwide with the rise of new institutions such as the Asian Infrastructure Investment Bank and New Development Bank.

This tendency was even formalized in November 2014, when these institutions – including the World Bank and the European Investment Bank –issued a joint statement re-affirming their commitment and capacity to lead the new global infrastructure agenda.

Considering this global context, our paper offers a closer look into the new financial initiatives and platforms recently launched to mobilize private finance for large infrastructure such as partnerships, facilities and investment plans. In particular, we underline the risks connected to the largely popular model of PPPs, analysing their negative impact observed in multiple studies.

Furthermore, the paper raises important concerns regarding the risks this development model entails. Those risks are valid both for developing countries’ economies - whose fragility and indebtedness is likely to increase - and for industrialised countries - where the current austerity regimes limiting public resources are threatening to prioritise infrastructure projects at the expenses of basic social services.