Ixtapa, G°México November 4 th , 2010 Ricardo J. Sánchez Chief Infrastructure Services Unit

1. Infrastructure, logistics and inland ports Infrastructure, gaps and policies in Latin America, a vision from ECLAC Ixtapa, G°México November 4th, 2010 Ricardo J. Sánchez Chief Infrastructure Services Unit Natural Resources and Infrastructure Division

2. All of you will be welcome at IAME 2011 Latin America next year in Santiago, Chile

3. Infrastructure and Development Global experience, both theoretically and empirically analyzed, gives valuable results regarding the positive relationship between the provision of infrastructure and economic and social development. Although in the past several questions were raised about the forms of measurement and empirical results, now it is recognizedthat there is a positive relationship, and that the presence of improvements in infrastructure helps to explain growth differentials among regions or countries. The services provided from the infrastructure complement that relationship, concluding that improved infrastructure services depend, among other factors, of appropriate conditions in their supply, and both supporting improvements in productivity and competitiveness of a country or region, contributing to economic growth. In the current design, we can no longer considering the infrastructure on one side and the other services, as it was traditionally. Is the definition of infrastructure services which play a role in the economic and social development.

4. Infrastructure Action and transport Economic Growth Infrastructure services increase productivity / reduce production costs Inequality and poverty Access to infrastructure services (including transport) has more positive effect on income and welfare of the poorest segments. Public services and universal access. Better access to markets (working, for example) Improving human capital: directly (access to safe water, sanitation) or indirectly (transportation to school, hospital, entertainment, etc.).

5. Infrastructure, Development and Equity Infrastructure Stock and Economic Development 7 Infrastructure Stock and Income Inequality 6 TWN BWA CHN KOR MLT 65.0 5 HKG CYP THA OMN MYS SGP 60.0 IRQ SLE 4 KEN IRL JPN ARE LKA ROM BRA PRT GNB HUN ZWE ESP TUN GRC LUX 55.0 IDN 3 IND GHA NOR PAN HND PAK PAN ISL MEX DOM RUS BWA EGY AUT SEN TTO POL ITA ISR BEL FIN MAR LVA FRA CZE COL BLR USA CHL BRA TUR SVN DEU BOL CAN ECU CHL AUS GBR DNK NLD PER SYR SWE GTM 50.0 2 ZAF COL BFA Growth of real pc GDP (%) MEX SAU MDG BHR DOM IRN SVK MRT ZMB EST ETH NIC TUR TZA PHL CRI ZAF ECU CHE PRY NZL THA SLV NPL PHL VEN MWI URY CRI DZA BGR NGA BGD SLV LBY 1 GTM 45.0 MYS TTO PER ARG COG CIV Gini Coefficient BFA CMR BEN HND GAB RWA GMB YEM JAM UGA LTU IRN PRY BOL VEN SDN GNB URY JAM KAZ NPL NGA TUN BDI ZMB GIN KEN LKA HKG ARG CIV TCD 0 JOR TZA SGP GIN HRV 40.0 MRT MAR ZWE TGO HTI ETH SEN NER JOR UGA CAF NIC DZA EGY -4 -3 -2 -1 0 1 2 3 4 AGO SLE KGZ USA NER AUS GHA PRT FRA IRL -1 GRC CHN MDG 35.0 NZL KGZ JPN ITA KAZ NOR KOR LTU EST BGD QAT YSR IDN CHE YSR LVA UKR IND PAK DNK SWE -2 DEU ISR TWN CAN 30.0 BLR RWA NLD UKR RUS GBR FIN ZAR POL ROM IRQ ESP BEL HRV AUT -3 SVN 25.0 CYP HUN LUX BGR CZE SVK -4 20.0 Infrastructure Stock Index (WB) -4 -3 -2 -1 0 1 2 3 Infrastructure Stock Index (WB) Source: Luis Servén 2008 If one considers the relationship between quality of infrastructure, real GDP per capita and the inequality of income distribution trends are the same in each case

6. Major Infrastructure Challenges in Latin America

7. However, with regard to infrastructure in Latin America it is observed a lag, with the following main drawbacks: • Physical tightness or shortage in the provision of infrastructure and services. • High dispersion and multiplicity of views regarding public infrastructure and services, and the consequent lack of integrality in policy approach in different processes (conception, design, implementation and monitoring, supervision and evaluation). • Failures or institutional and regulatory obstaclesin driving policy and the organization of the markets. • Weakness and / or lack of sustainability criteriain the design of policies for infrastructure services, especially transport. • Also, issues such as problems in the facilitation of transport and trade(which relate to technical regulations and bureaucratization of business and transit processes) as well as access to funding, quality and performance of public –private associations, institutional and regulatory accounting and operating conditions and mature infrastructure market completes the spectrum of issues that should be reviewed to maximize the contribution of infrastructure services on development and integration.

8. For us, the main challenge is to align the conception, design, implementation and monitoring and control of policies related to infrastructure and services to maximize their impact on development, requiring the review of its policies for infrastructure services.

9. The Infrastructural Gap

10. Demand Gap Supply Estimate of the infrastructure gap in transport in Latin America (base 1995 = 100) Gap Source: ECLAC, 2009

11. Gap Gap Gap Gap Supply Supply Supply Supply Demand Demand Demand Demand Estimate of the infrastructure gap in transport, selected countries (base 1995 = 100) Argentina Brazil Chile Mexico

12. Infrastructure Investment as ratios of GDP Public Private Total Source: the authors. How we are today in terms of infrastructure investment? Investment in economic infrastructure has reversed its downward trend during the period 2007-2008. Internal composition shows the public sector with a stable share of about 40% in the last two decades. For its part, private sector, of great importance in the nineties, returned to exhibit higher dynamism in 2007 and 2008. This composition could change temporarily in 2009 due to the impact of counter-cyclical policies and increased private risk aversion took place during the international crisis. Source: ECLAC, 2010

13. Challenges beyond the infrastructure gap

14. Physical infrastructure, economic and technical regulations

15. Economic and Technical Standards and Regulation Territorial Development Creating a strategic, shared, complementary and integrated vision Productive Development Social Development Institutional Development Associativity International Legal Organization Environmental Protection Source: Sánchez y Wilmsmeier (2005)

16. Grouping of conditions for Development

17. Productive Development Economic and Technical Standards and Regulation Social Development Associativity A strategic, shared, complementary and integrated vision Territorial Development Institutional Development Environmental Protection International Legal Organization Source: Sánchez y Wilmsmeier (2005)

18. Institutions: how public policies are conceived, developed and implemented

19. Economici Regulation Logistics Cost Technical Regulation Port Security Road Safety Charges Security synergy Cargo Tracking Intelligent Systems Document Flow INFRASTRUC-TURE TRANSPORT Logistic The design of public policies The traditional way promotes dislocated policies that can not address the interactions and do not have synergistic effects. Decreases its contribution to development because it spreads naturally associated phenomena Associated phenomena, common needs, regulation, integrated policy

20. Economici Regulation Logistics Cost Technical Regulation Port Security Road Safety Charges Security synergy Cargo Tracking Intelligent Systems Document Flow INFRASTRUC-TURE TRANSPORT Logistic Social and Economic Development SUPERIOR CONDITIONS FOR POVERTY REDUCTION INCREASE IN PRODUCTIVITY AND COMPETITIVENESS Associated phenomena, common needs, regulation, integrated policy

21. Role of the Government in Logistics Planning For an efficient provision of public goods is required Planning and Regulation(This is not inconsistent with Public – Private Associations) Is required to analyze infrastructure, transport and logistics as a system rather than as separate components to meet market requirements (quality-security-price) (administrative and legal implications!) Essential is a national and regional clear strategy, shared and sustained over time! ► Within the same authority (Public Leadership) ► Consensus with business and labor sector (Private Sector Participation and Commitment) ► Strengthen Dialogue and Analysis with consistency and coordination (Actors)

22. How it is built an integrated policy? Recognizing that each country is unique and has special features that prevent "import" a solution directly. ECLAC has published a study: G. Cipoletta Tomassian, Gabriel Pérez & Sánchez, Ricardo J. (2010): Políticas integradas de infraestructura, transporte y logistica: Experiencias internacionales y propuestas iniciales; Serie NRID No 150, ECLAC European Union Finland South Korea Germany Colombia Netherland Spain

23. The development of inland ports in Latin America has followed a path similar to the policies of infrastructure, transportation and logistics, with low integration into the planning and execution of public policies. Has been restricted to private initiative, thus, there are now excellent centres with high productivity within the precincts, but with no sufficient connection to the rest of the transport and logistics system. Many inland ports are sometimes installed in locations that do not have the necessary connections, creating congestion and new infrastructure needs to be solved, without planning and with the tight timetable, reducing the efficiency of public resource allocation and appealing almost exclusively to the prevailing mode (ignoring railways and waterways, frequently). In this context… what about inland ports? (i)

24. In short, there is not integration of logistics and inland ports to the entire transport system. There are no agreed policies at regional level (between countries) and often also within a country. Transportation planning and infrastructure tend to be dissociated from the logistic needs. The development of inland ports is independent, many times, of the development of seaports. Currently there are major inland ports throughout Latin America, however, because the issues raised above, the numbers are still low. In this context… what about inland ports? (ii)

25. For these reasons, the potential expansion of inland ports is very high throughout the region. Already some countries, like the case of Jamaica, and incipiently some of South America, have begun planning integrated transport and logistics systems. It is therefore necessary to integrate the vision and address the resolution of issues related to the development of inland and maritime ports together, and also with the rest of the system. Otherwise the solutions will remain partial and inefficient from the point of view of the economy as a whole, beyond the private benefits of the suppliers. In this context… what about inland ports? (iii)

26. Thank You! Ricardo J. Sánchez Chief Infrastructure Services Unit Natural Resources and Infrastructure Division United Nations ECLAC +56 2 210-2131 Ricardo.Sanchez@ECLAC.org http://www.eclac.org/transporte Client Logo