The G-20, Economic Development, and Trade

Sub-Saharan Africa's infrastructure lags behind in both quality and quantity. The current infrastructure deficit is "holding back" Sub-Saharan Africa's per capita economic growth. Therefore, the benefits of scaled up and coordinated infrastructure investment are clear. The resulting hard infrastructure will expand trade and foster development. However, there are specific characteristics of Sub-Saharan Africa that creat investment constraints that prevent the large required investment in infrastructure. Many emerging economics have accumulated large pools of savings. These provide a potential untapped course of needed moneys.

The mission of this Capstone was to assist the G20 in promoting trade for development. One of the main obstacles for trade in the developing world is the lack of hard infrastructure to produce and transport goods. The infrastructure deficit across the developing world, in particular within Low Income Countries (LICs), hinders the development of trade and income growth in these countries. Four main types of infrastructure are globally recognized as promoting trade – transportation, storage, energy and communications. This capstone focuses on transportation infrastructure that is directly linked to trade development.

In order to promote infrastructure development, additional funding sources are required. One possible source is excess savings, primarily in Asia and the Middle East. This capstone assesses channels through which funds can be transferred from savings surplus nations to LICs. The transfer of funds could potentially flow through a mechanism that reduces financial and political risks while still providing returns to investors. G20 countries will most likely be involved with promoting and facilitating this mechanism and providing support. This Capstone identified the incentive structure that will promote this flow of funds resulting in infrastructure development that promotes trade in LICs.