Governments formulating long-term economic-growth strategies, companies in the infrastructure business scouring the globe for markets to support their long-term growth ambitions, and investors all require certain vital information about existing infrastructure assets. Governments need to understand whether current investments are enough to support growth, while companies and investors need to understand which countries and which asset classes represent the best opportunities. McKinsey’s Infrastructure Spend and Stock database (ISS) speedily delivers such insights, helping all sides to grasp the infrastructure needs of given countries.
ISS analyzes infrastructure assets in 75 countries that account for some 97 percent of global GDP, assessing them from three perspectives:
- Historical. The historical perspective looks at patterns of infrastructure spending over two decades and the current state of play, sizing total spending in each country and breaking this down for five major asset classes: real estate, transport, social infrastructure (education, hospitals, and recreational facilities), utilities, and process industries (such as mining, chemical plants, and iron and steel plants). It also shows how infrastructure investments have been financed—publicly, privately, or through public-private partnerships.
- Future. The second perspective looks at future spending needs. By examining the current value of a country’s infrastructure assets, it is possible to estimate how much additional spending will be required by asset class. The rule of thumb is that the value of a country’s infrastructure stock is roughly equal to 70 percent of its GDP.1 A country aiming to increase its GDP by 4 percent a year, for example, would thus need to increase the value of its infrastructure assets by 4 percent a year. And of course, the higher a country’s growth ambitions, the higher its infrastructure spending will have to be to support that growth.
- Comparative. The comparative perspective benchmarks the infrastructure of one country against that of others, in terms of the quality and penetration rates of each asset class (such as the length and density of a country’s road network, the number of telephone subscribers, or power-generation capacity) and how its relative position has changed over time. 2
An African government deployed ISS and subsequently adjusted its planned infrastructure spending to support the country’s growth targets. A Canadian engineering and construction company examined 20 sectors around the globe to identify the best profit pools. A Nordic private-equity company identified the regions where road construction was most lucrative. These are a handful of examples of how governments and companies are benefiting from ISS’s rapid access to valuable data on infrastructure assets.
1. The estimation is based on an assessment of 20 countries’ infrastructure stock between 1992 and 2012.
2. Quality is assessed using World Economic Forum rankings.