Eastern and Western Paradigms: a Comparative Analysis and Evaluation of Infrastructure Development Models Through the Jamaica Highway 2000 Case Study
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Eastern and Western paradigms: A comparative analysis and evaluation of infrastructure development models through the Jamaica Highway 2000 Case Study a thesis presented to the School of Architecture, Civil and Environmental Engineering of the École Polytechnique Fédérale de Lausanne in partial fulfillment of the requirements for the degree of Master of Science in Civil Engineering by Marc Solsona Bernet (marc.solsonabernet@epfl.ch) under the supervision of: Dr. Panagiotis Tzieropoulos École Polytechnique Fédérale de Lausanne Laboratory for Intermodality, Transport and Planning (LITEP) Prof. Raymond E. Levitt Stanford University Global Projects Center Stanford, California June 28, 2016 Marc Solsona Bernet Eastern and Western paradigms: A comparative analysis and evaluation of infrastructure development models through the Jamaica Highway 2000 Case Study Global Projects Center, June 28, 2016 Supervisors: Dr. Panagiotis Tzieropoulos and Prof. Raymond E. Levitt École Polytechnique Fédérale de Lausanne Laboratory for Intermodality, Transport and Planning (LITEP) School of Architecture, Civil and Environmental Engineering, ENAC Route Cantonale 1015 and Lausanne Abstract Multilateral infrastructure investments in developing nations are crucial in spurring economic growth and prosperity. While this responsibility has traditionally been undertaken by Western economies, mainly through the World Bank and its affiliates, the last decades have seen an increasing shift of this capital burden towards advanced developing nations. The differences between these two paradigms, with certain limitations, can be exemplified by studying the West’s World Bank Group (WB) and the East’s China Policy Banks (CPB). When CPB lent more money to other developing economies than the WB in 2011, many scholars deliberated the differences between these paradigms and the ensuing consequences for borrower countries. The current perception, which has kindled the hypotheses for this research paper, is that Eastern paradigm projects are financed and delivered faster, but its social, environmental and quality standards are comparatively lower. This research paper is novel in that it contrasts this hypotheses against secondary data in a two-pronged methodology: (1) archival analysis of WB and CPB policies, and (2) case study of the Highway 2000 project in Jamaica. The subsequent analysis and evaluation of both frameworks validates the paper’s hypotheses. Conclusively, three main learning points drawn from this exploration. First, infrastructure development presents a vast array of challenges, and certain projects would be simply not financeable without multilateral institutions or foreign capital. Second, eastern paradigm proves to be funded and delivered faster, but at the expense of transparency and social, environmental and quality standard. Third, borrower countries would need to recognize the subtle and more explicit differences between these models and factor the holistic consequences into its infrastructure development strategies. iii Résumé Des investissements multilatéraux pour les infrastructures dans les pays en voie de développement sont cruciaux pour stimuler la croissance économique et la prospérité. Bien que cette responsabilité ait été traditionnellement prise par les économies oc- cidentales, principalement par la Banque mondiale et ses affiliés, les dernières décennies ont vu un changement de plus en plus marqué de l’origine de cette sortie de capital. En effet, les financements provenant de pays en voie de développement avancés ont considérablement augmenté - au fur et à mesure que ces pays aient effectué la transition vers une économie de marché. Les différences entre ces deux paradigmes, peuvent être illustrées, avec certaines limitations, par l’étude de la Banque Mondiale (BM) pour l’Ouest et les China Policy Banks (CPB) pour l’Est. Lorsque les CPB ont prêté plus d’argent à d’autres économies en développement que la BM en 2011, des nombreux chercheurs se sont demandés quelles étaient les différences entre ces paradigmes et les conséquences qui en dérivent pour les pays emprunteurs. La perception actuelle , qui a incité l’hypothèse de ce document de recherche est que les projets suivant le paradigme oriental sont financés et livrés plus rapidement, mais leurs standards sociaux, environnementaux et de qualité sont plus faibles. La valeur de cette recherche est donné par le fait qu’elle contraste double- ment ces hypothèses en utilisant des donnés secondaires: (1) Tout d’abord, à travers une analyse des politiques de la BM et des CPB et d’autre part,(2) à travers l’étude du projet Highway 2000 en Jamaïque. À travers de ces deux procédures, on constate que l’hypothèse est validée. Finalement, trois conclusions principales sont tirées de cette exploration: Premièrement, le développement des infrastructures présente de nombreux défis, et certains projets ne seraient simplement pas finançables sans la contribution des institutions multilatérales ou de capitaux étrangers. Deuxièmement, les projets développés en suivant le paradigme oriental sont financés et livrés plus rapidement, mais au détriment de la transparence et des standards sociaux, envi- ronnementaux et de qualité. Finalement, les pays emprunteurs doivent reconnaître les différences subtiles et explicites entre ces deux modèles, et tenir en compte la totalité de ces conséquences dans leurs stratégies de planification et développement des infrastructures. iv Acknowledgements First and foremost, I would like to thank Raymond E. Levitt, for having welcomed me at the Global Projects Center, opening my vision towards new horizons. This thesis would not have been possible without his guidance, energy, ideas and feedback throughout the whole research. He consistently allowed this paper to be my own work, but steered me in the right direction when needed. I am really grateful to Panos Tzieropoulos for his warm support since the beginning and for having conducted the extremely difficult task of supervising my research from the distance. He has helped me to focus on the ideas contained in this thesis and pushed me to reach a more formal version of them. I would also like to extent my gratitude to Michael Bennon for his insightful feedback on this research and in particular, the Jamaican Case Study. I am thankful to my colleagues at the GPC for the warm and friendly atmosphere. Among them, I would like to particularly thank Soh Young for her interest and valued feedback on the Analysis section, and Rajiv for the hours we have shared both in the office and out on the soccer pitch. I am extremely grateful to the École Polytechnique Fédérale de Lausanne for having supported my studies and research. I’ve been both honored and challenged to be an Excellence Scholar, and I have done my best through my studies and extracurricular activities to pave the path forward. In addition, I am thankful towards my good friend Ajay, for kindly proofreading and correcting various parts of this research and for our general discussions about life. This also holds for Matteo, for helping me with the French abstract. Last but not least, I would have never came this far without the unconditional support of my family and closest friends. I also owe much of my gratitude to Jordina for the support and joy she brings. I am greatly indebted to all of them. v Contents 1 Introduction 1 1.1 Background................................ 2 1.1.1 A Global Project and its stakeholders.............. 11 1.1.2 Infrastructure Procurement and the role of bilateral and multi- lateral investments........................ 14 1.1.3 The eastern and the western paradigms ............ 22 1.2 Research Question, Objectives and Limitations............. 32 2 Literature Review 35 2.1 Influence of the two paradigms to developing countries . 35 2.2 Project Comparison............................ 40 2.3 The Case Study Method ......................... 45 2.4 Set of Hypotheses............................. 50 3 Methodology 51 3.1 Analysis.................................. 51 3.2 Case Study ................................ 53 3.2.1 Criteria in Project Selection ................... 54 3.2.2 Criteria in Project Comparison.................. 55 3.2.3 Case selection and composition................. 58 3.2.4 Data Sources ........................... 59 4 Analysis 61 4.1 Governance Structure and Decision Process .............. 61 4.1.1 The World Bank.......................... 61 4.1.2 China Policy Banks........................ 65 4.1.3 Comparison and Discussion................... 70 4.2 Social and Environmental Appraisal................... 72 4.2.1 The World Bank.......................... 73 4.2.2 China Policy Banks........................ 75 4.2.3 Comparison and Discussion................... 77 4.3 Overview of Investment Projects..................... 81 5 Case Study: Jamaica Highway 2000 85 5.1 Introduction................................ 85 vii 5.1.1 Political Context ......................... 87 5.1.2 Jamaica Infrastructure...................... 89 5.1.3 Economic Context ........................ 92 5.1.4 Social Context .......................... 93 5.2 Project Description............................ 94 5.2.1 Quick Facts ............................ 94 5.2.2 Execution............................. 95 5.3 Phase 1A/1B - Western Paradigm.................... 98 5.3.1 Overview ............................. 98 5.3.2 Concession Agreement...................... 99 5.3.3 Stakeholders Map ........................100 5.3.4 Funding Structure ........................101 5.3.5 Social and Environmental