The G-7 has launched the Partnership for Global Infrastructure and Investment, which intends to raise $600 billion for infrastructure projects in low- and middle-income countries over the next five years. It is intended as a response to China’s Belt and Road Initiative, according to CNBC.
The background: The BRI is one of President Xi Jinping’s signature economic and foreign policy initiatives and aims to build physical and digital infrastructure through financing and development projects in dozens of locations in Asia, Europe, the Middle East and even the Americas.
Benefits of the G-7 partnership: With some of the world’s strongest economies stepping up coordinated efforts to build infrastructure around the world, developing countries including India, Brazil and Indonesia could see stronger economic growth, with spillover effects for global trade and business.
- This effort also has some alignment with the infrastructure components of other recent U.S. initiatives, like the Indo-Pacific Economic Framework and the Americas Partnership for Economic Prosperity.
However, the effort faces significant challenges.
- Building infrastructure in developing countries will be a major undertaking. According to the Organization for Economic Cooperation and Development, Asia alone needs an estimated $26 trillion to pay for infrastructure spending.
- The G-7 initiative faces some questions about whether governments have or will provide sufficient funding.