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TRANSPORT INFRASTRUCTURE by Caleb Esrig TRANSPORT INFRASTRUCTURE By Caleb Esrig INTRODUCTION Politically and economically, Accra, the capital and largest city in Ghana, is one of the most important cities in its region of Africa. As part of the country’s economic development, it is seeing an increasing demand for oranges and other fruit products, yet the country lacks much of the critical infrastructure necessary to facilitate a thriving agriculture industry. Oranges in the capital are a scarce product, making prices high. But just 15 kilometers outside the capital, women transport oranges on their heads to surrounding villages. There, they make a living selling surplus oranges that are gretly in demand just a short trip away. Were roads and bicycles widely available and accessible, these women could more profitably cultivate their land and increase their production. They could build thriving agricultural organizations and generate more income for themselves and their families. Instead, they are limited by poor transport infrastructure. Woman in Ghana Transport infrastructure is critical to the world’s developing carries building economies. Investors know this: When considering agricultural products developments and investments in Ghana, they see access to roads as G-lish Foundation a primary concern. The issue touches all aspects of life: security, prosperity, equality, and freedom. When people lack vital transportation infrastructure, they lack the tools to succeed. This story is not unique to Ghana. Around the world, access to vital transport infrastructure can determine the prosperity of a city, region, or nation. That is your challenge as delegates to the World Bank. You face not a single question in one country but a myriad of dilemmas in countries around the world. Your task is to craft the World Bank’s HARVARD MODEL CONGRESS policies for supporting transport infrastructure development around the world. To do so, you must consider two primary objectives: Adequate transport firstly, how the World Bank allocates its resources and secondly, how best to improve on transport infrastructures. investment is The discrepancies are huge. The density of road networks in critical to developing countries is only about 10% of developed countries. In advancing Indonesia, for example, vehicle ownership grows around 10% each economic year while road developments expand the networks only 1% on development and average. Meanwhile, investments in developing countries in public fighting climate transportation systems are often weak or non-existent. This topic is more important now than ever before. Nearly one- change fourth of global energy-related carbon dioxide emissions come from transport, and the number of vehicles on the road is expected to double, reaching two billion, by 2050. Cities are seeing soaring population growth, with around two-thirds of the global population projected to live in cities by 2050. Adequate transport investment is critical to advancing economic development and fighting climate change. It depends, however, on judicious support from the World Bank. The World Bank EXPLANATION OF THE ISSUE aims to promote shared prosperity Historical Development by increasing the incomes of the Initially chartered in the 1940s to help rebuild European countries after World War II, the World Bank’s mission is now to end poorest 40 percent extreme global poverty and promote shared prosperity. In the past of people in every half-century, it has facilitated billions of dollars of investments in country. developing countries to alleviate poverty and foster growth. The World Bank Group technically comprises five institutions, several of which are critical in transport investments. You as delegates will represent the interests of the group. International Bank for Reconstruction and Development and International Development Association Capital – assets, The International Bank for Reconstruction and Development such as money, that (IBRD) and International Development Association (IDA) function facilitate by providing loans, guarantees, risk management products, and economically useful advisory services to developing countries. They differ only in that the activities IBRD has often supported middle-income countries, and the IDA has focused on low-income countries. IDA typically offers very generous terms to its borrowers and even provides grants in extreme cases. They together make up the world’s largest development bank, and they aid the missions of the World Bank by providing capital access to growing countries. For capital-intensive projects like © HARVARD MODEL CONGRESS EUROPE 2020 – REDISTRIBUTION OR REPRODUCTION PROHIBITED 2 HARVARD MODEL CONGRESS transportation investments, this is essential. They are headquartered in Washington, DC. Debt financing – financing a project by International Finance Corporation loaning money to While IBRD and IDA typically aid governments and public developers projects, the International Finance Corporation (IFC) focuses on advancing the private sector in developing economies. It achieves Equity financing – this goal through loans and investments that create markets for financing a project by private developers to access capital, and it provides both debt providing money in financing and equity financing. exchange for a stake Multilateral Investment Guarantee Agency in the future profits of the investment; this is The Multilateral Investment Guarantee Agency (MIGA) how the stock market promotes international investments by providing loan guarantees works to investors and lenders. These guarantees protect against non- commercial risks which may otherwise make loans difficult to access. For example, a government in a war-torn area may find loans for Loan guarantee – a critical infrastructure projects difficult or impossible to access, as promise by one party creditors may fear political upheaval. MIGA steps in and insures the (such as MIGA) to loans against the risk of war, allowing creditors to grant loans at assume the debt reasonable rates. obligation of a second party if that party Scope of the Problem defaults Transport infrastructure is one of the most important determinants of a country’s economic success: Without some form of transport infrastructure, individuals are limited to the location in which they reside. The results of such caging can be seen in many aspects of life, including access to healthcare and educational opportunities. By understanding the impact of poor transport infrastructure and the possible solutions, you can best devise the strategy of the World Bank. Poverty and Access Around the world, two-thirds of the extreme poor live in rural areas. Public investments in these areas have, over the past 30 years, stagnated or declined, so infrastructure is often lacking or nonexistent. This problem is particularly evident in Africa, where A traffic jam in limited infrastructure impedes economic development. Many of the Delhi, India extreme poor are isolated by distance and terrain from better Wikimedia opportunities, and studies clearly indicate ties between rural isolation and poor health, low productivity, and low school enrollment. This solidifies and reinforces cycles of poverty. Climate Impacts The transport sector is a disturbingly potent contributor to global climate change, as it is the source nearly one quarter of energy- related emissions. The impacts of climate change on human society © HARVARD MODEL CONGRESS EUROPE 2020 – REDISTRIBUTION OR REPRODUCTION PROHIBITED 3 HARVARD MODEL CONGRESS and safety are tremendous, and its effects are likely to have enormous damages on low-income countries and populations. When considering transport investments, the World Bank has made climate concerns a central focus, committing billions to climate finance and to climate-focused mobility developments. These policies are discussed in greater detail in later sections. Safety and Sustainability The World Bank is a leader in promoting the safety and sustainability of transport systems around the world. Beyond recognizing the vast economic potential of transport, it understands that there are risks as well. The World Bank leads the Global Road Safety Facility, which works with seven other development banks to harmonize road safety practices in client countries and promote safer roadways. The stakes are large: this project is part of an effort to achieve the UN’s goal of saving five million lives and preventing 50 million serious injuries through better road safety policies. As part of the Africa Transport Policy Program, the World Bank partners with 41 African countries to enhance urban mobility and road safety. It considers this a critical component of laying the foundation for efficient, safe, and sustainable transport systems in Africa. When considering projects for the World Bank to pursue, effective delegates should consider the implications for transport safety and how to further ensure it. Through the Sustainable Mobility for All program, the World Bank has envisioned a world where access, safety, efficiency, and climate-friendliness are universal. Infrastructure Types There are several important types of transport infrastructure frequently supported by the World Bank: roadways, buses, railways, airplanes, and waterways are the most important. Roads and highways are often the dominant form of land transport, and they can be critical to connecting rural areas. They often carry more than 80% of passenger miles, and the World Bank typically works to incentivize the building of new roadways and highways that can expand economic
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