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G20 Report: investing in Third World infrastructure could unlock wealth of rich nations and boost global economy

http://www.ottawacitizen.com/business/payoff+helping+poor+nations/5648913/story.html

A big payoff in helping poor nations

A report for the G20 summit says investing in Third World infrastructure could unlock the wealth of rich nations and boost the global economy, writes Paul Hoskins

BY PAUL HOSKINS, REUTERS NOVEMBER 3, 2011

Simple reforms would eliminate much of the risk of investing in poor countries, unleashing billions of dollars of pent up cash and providing a welcome boost to the world economy, says a report to be presented at this week’s G20 summit.

Tidjane Thiam, charged with pulling together the report, believes world leaders will seize on a plan to spur infrastructure investment in developing countries that includes reform of The World Bank and its regional counterparts but does not tap crisis-weary taxpayers.

“We need growth. We’re not going to get out of this by just cutting deficits,” the Franco-African engineer who runs Britain’s biggest insurer, Prudential Plc., told Reuters before heading to the Cannes summit.

“At one point it was important to convince everybody we needed to cut deficits and we got there, and now everybody is really thinking, ‘What’s the positive message and how do we get the public out of just thinking about cuts and cuts and cuts?’ ”

Thiam, a former Ivory Coast planning and development minister, says the G20 High Level Panel for Infrastructure Investment that he chairs has at least part of the answer.

Rich nations may not be generating much new wealth at the moment but they are sitting on trillions of dollars of accumulated wealth that is earning little in the way of returns and not doing very much to foster a global economic recovery.

“There’s no yield in this world, no yield anywhere, and there’s not going to be any for quite a while,” Thiam said in his London office.

Spending on infrastructure in poorer countries does have a history of generating big returns. It also helps unlock their growth potential, thereby increasing profitability still further and creating a virtuous investment cycle.

Remove a large part of the risk element and you have the recipe for a highly profitable, mutually beneficial relationship between the world’s most and least developed economies, Thiam and his fellow panel members believe.

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