Brazil, Russia, India, and China (the BRICs) were first grouped together in 2001 as the countries most likely to produce rapid economic growth (South Africa joined in 2010). Today another phenomenon binds the BRICS together: corruption scandals that have hit state-funded infrastructure companies and the projects they’ve overseen.
The World Bank annual meeting in Lima, Peru this weeks offers a unique opportunity. While China’s massive investments in infrastructure are much-needed, they come with huge risks. The World Bank can reduce those by working with these new efforts—with all their capital—to apply the Bank’s experience in protecting the environment and local communities.
Latin America invests about 2% of GDP on infrastructure. Between 1992 and 2011 China invested an average of 8.5% of GDP in infrastructure per year. Given the demonstrated effects of infrastructure on development and poverty reduction, it’s time for the region to make a concerted effort to attract foreign investors.
Given Latin America’s woefully inadequate infrastructure, China’s plans to invest in roads and rails is a welcome opportunity. The question becomes, though, under what conditions for bidding and procurement and the protections for community land rights.