While the consumerism of infrastructure (Trend 9) and the rise of populist agendas (Trend 8) will drive populations to focus on the demand side of infrastructure, all signs suggest that the ‘supply’ side is rapidly globalizing.
In our Emerging Trends 2015, we noted that infrastructure players – investors, developers and, increasingly, operators – were starting to expand their global capabilities and transcend national borders. And over the past 2 years this trend has continued, catalyzed by rapidly-maturing players from the developing world, a new cohort of global operators have emerged seeking to expand their footprint. Some have been encouraged, supported or even subsidized by government ‘outbound’ strategies (often wielding infrastructure as a policy tool). Others are simply looking to diversify.
China is a case in point. The country boasts a massive pipeline of projects and local operators and investors are rapidly gaining valuable experience. As the government continues to encourage their State Owned Enterprises and private sector to compete in open market tenders, these capabilities are starting to influence international competitions. The One Belt, One Road project is also a massive statement of intent.
At the same time, we have noted a relative ‘globalization’ of models and approaches as governments start to learn from each other and share best practices for everything from infrastructure planning and prioritization through to deal structuring and procurement. And this, in turn, is helping international players standardize and improve key capabilities.
In 2017, we expect this trend to continue and, in many cases, pick up speed. But we also recognize that there will be forces acting against globalization: rising protectionism and nationalist agendas (discussed in Trend 8), shifting social preferences (discussed in Trend 9), increasing focus on ‘localization’, disruptive trade negotiations and other uncertainties will all act to dampen enthusiasm for globalization. However, while the pattern may be confused, the direction of travel is clear.
The days of western domination of infrastructure are clearly over as the center of gravity shifts east, both in terms of investment and thought. However, the big and ultimate test for globalization is whether it brings down costs, improves accessibility and increases value of infrastructure around the world, through improved competition and greater levels of innovation.
Ultimately, we expect that these benefits will drive governments and their populations to once again shift towards a more open and global marketplace.