Asia’s Infrastructure Contest: Quantity vs. Quality
April 17, 2018
This week in Washington is for global economy wonks what fashion week in Paris is for the best dressed. With roundtables instead of runways, the World Bank’s annual spring meetings and the events around them shape and reflect trends, some longer standing than others. As in years past, there will be calls for equitable growth, inclusive growth, sustainable growth, and responsible growth. Simple growth, simply put, is not in style.
Calls for conditioning growth are not new. Widely used quantitative indicators, like gross domestic product (GDP), have always been shallow snapshots, ignoring environmental impacts, inequality, and other priorities. As Robert F. Kennedy said about gross national product (GNP) 50 years ago last month: “It does not include the beauty of our poetry or the strength of our marriages, the intelligence of our public debate or the integrity of our public officials…it measures everything in short, except that which makes life worthwhile.”
But for all the talk about quality, quantitative targets have long dominated policymaking. Several years before Robert Kennedy pointed out the shortcomings of GNP, it was his brother, President John F. Kennedy, who set the first U.S. GDP growth targets. A rebuttal to Nikita Khrushchev’s claims about the Soviet economy, JFK’s move was driven not only by economics but also geopolitics. As David Pilling argues in a recent book, The Growth Delusion, the obsession with GDP continues to drive, and often warp, policymaking around the world.
The tug of war between quantity and quality is now at the center of Asia’s infrastructure contest. China’s Belt and Road Initiative (BRI) has a largely quantitative pull. Estimates range widely, but all point to a massive endeavor, promising some $1 trillion for infrastructure and aiming to connect a growing list of some 70 countries. The world needs trillions of dollars more in infrastructure investment, as estimates from the Asian Development Bank and others make clear. If done right, the BRI could help address those needs.
But right is always easier said than done. Like GDP, the BRI’s aspirational investment levels tell us little, if anything, about the actual impact of new infrastructure projects. Will that spending help people who need it most? Will it go into viable projects or white elephants? Will it help or hurt climate change? Will it create or destroy value? As IMF managing director Christine Lagarde said last week, the “challenge is ensuring that Belt and Road only travels where it is needed.”
Ignoring quality can be costly, as the United States’ race to build transcontinental railways 150 years ago shows. Speed was prized over safety, ease of access prioritized over protecting the environment, and financing was opaque. Workers were mistreated, and the railways catered to elite interests, despite drawing heavily on public resources. Ultimately, these missteps helped spark two financial crises. A greater emphasis on qualitative concerns could help China avoid making similar mistakes.
Seizing on those concerns, Prime Minister Shinzo Abe of Japan launched the “Partnership for Quality Infrastructure” in 2015. Backed by $200 billion, it aims to persuade countries to pay more up-front for projects that cost less over their lifetime. During Japan’s host year in 2016, the G7 issued a set of principles for “quality infrastructure.” Safety, sustainability, and reliability are among the goals mentioned. Word for word, many of the same conditions attached to growth are being attached to infrastructure.
But Japan and other supporters of “quality” infrastructure face two central challenges. First, they need to broaden support for these goals. Particularly among developing economies, there is a risk that “quality” is conflated with luxury, viewed as nice-to-have rather than essential. Layering on too many requirements will make quality impractical or even unachievable. Nor should “quality” become a euphemism for “not Chinese,” which could set back efforts to raise standards. Looking ahead, Argentina and Japan’s G20 host years are important opportunities to a build a larger coalition for “quality” infrastructure.
The second challenge is operationalizing these principles. For all the talk about “quality,” experts differ about what these aspirations should mean in practice. The term “sustainable,” for example, is commonly used to cover everything from environmental issues to financing and maintenance. This is a balancing act, of course. The more detail that is provided, the more difficult it is to sustain a broader consensus. But without greater specificity, principles can be dismissed as platitudes or espoused but not implemented.
One promising avenue to encourage greater follow-through is to develop criteria for measuring and monitoring quality. Providing objective measures could help clarify what quality means in practice. Those measures could also provide a basis for comparing how different approaches perform, helping to highlight best practices, and assist officials making project decisions. In other words, quality could use some quantification.
Jonathan Hillman is director of the Reconnecting Asia Project at the Center for Strategic and International Studies in Washington, D.C. Find him on Twitter @HillmanJE.
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