This post was written by Hatchet reporter Cort Carlson.
Six panelists spoke to a crowd of about 250 at Jack Morton Auditorium Wednesday about infrastructure in developing nations and how the international community can help move it along, as part of the 2016 IMF Annual Meetings.
Namrata Brar, the U.S. bureau chief for New Delhi Television, moderated the panel, which included government officials, economists and a bank executive.
Brar said there is a $1 trillion gap between wealthy and developing nations, a disparity large enough to rival the economies of nations like Canada and Brazil, and an issue that must be addressed in the coming years.
Here’s what the panelists had to say on key issues affecting developing nations:
1. IMF can aid nations
Mitsuhiro Furusawa, the IMF deputy managing director, said the fund has tools to assess the state of developing nations’ economies and can give informed advice for how to mobilize internal finances to incentivize private investment.
Citing that most resources come from the government of the developing nation, Furusawa emphasized the importance of cooperation between government agencies and private investors in growing a stable economy.
“If there is no macroeconomic stability, nobody benefits,” Furusawa said.
2. Playing uneven catch-up
Kemi Adeosun, Nigeria’s minister of finance, said that the current Nigerian president’s administration is working to ensure that Nigeria diversifies its economic profile.
“We’ve got to move from being a consuming economy to being an investment economy,” Adeosun said.
Adeosun said that Nigeria, like other African nations, is too far behind to invest in large infrastructure works like a national power grid. Instead, Adeosun explained that long-term growth can be achieved by redirecting funds from investments which only maintain the status quo of development to investments that increase investment in infant industries, in order to attract foreign investors.
Adeosun criticized the narrative that he said is promoted by Western governments in Europe and the United States that Africa, specifically Nigeria, should develop infrastructure using green energy alone, despite being rich in coal and other energy sources deemed environmentally unfriendly.
“We must also make sure that the playing field is level,” Adeosun said. “We in Nigeria have coal and we have a power problem. We’re being blocked because it’s not green.”
3. Governance is key
Jonathan Taylor, vice president and member of the Management Committee of the European Investment Bank, discussed the importance of governments accurately assessing domestic financial affairs to make investors confident that they will see returns on investment.
“Good regulatory frameworks are needed to ensure that over the lifetime of the investment they can have some confidence that it would work properly,” Taylor said.
Anders Borg, chair of the World Economic Forum’s Global Financial System Initiative and former minister of finance to Sweden, emphasized the cruciality of government support in building and maintaining infrastructure.
“You can’t grow agriculture and you can’t grow back manufacturing and you can’t manage urbanization without infrastructure,” Borg said. “Governance is crucial for the long-term perspective.”
4. Redefining development
Aldo Caliari, a 2007 alumnus and the director of the Rethinking Bretton Woods Project at the Center of Concern, said that in developing countries, the risk can be too high for mega-projects like ship building, canal construction and an electric grid design on a national scale which may never even be completed.
“1 in 1,000 mega-projects happen according to schedule,” Caliari said.
Equally high, Caliari explained, are the standards we hold to developing nations.
“It is really unfair to demand that developing countries go green when they’re not given the tools to do so,” Caliari said.
Paul Collier, a professor of economic and public policy at the Blavatnik School of Government at the University of Oxford and director of the International Growth Centre, echoed the call for reshaping the development agenda.
“We need to completely reshape aid budgets from paying for the smiley face on the child, which has been the social agenda for the last fifteen years, to actually doing the serious stuff of getting proper firms to go to countries, where there’s an awful lot of money,” Collier said.