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Scott Jagow: In addition to our economic doldrums, the world seems to be having some infrastructure problems. Think about what’s happened in just the last month: Two railway disasters in China. Massive power outages across South Africa. Huge Internet disruptions in India and the Middle East.
It’s time to visit with our economics correspondent, Chris Farrell. Chris, what is going on?
Chris Farrell: Well, we’ve had fast global economic growth for five years, and particularly in the emerging markets, they’ve been throwing up office towers and factories, commercial properties — and neglecting infrastructure. In huge parts of India and China, the infrastructure is strained. So I think despite all this doom and gloom, if we want to look at a silver lining, I think we’re going to see some real infrastructure investment over the next couple of years. And by the way, it’s not just in emerging markets, it’s here in the U.S., where I think we’re all aware. You know, much of our highway system was built around the time that Elvis was a big star. So we’re having some real crumbling infrastructure here, too.
Jagow: OK, but where is the money going to come from for the projects here and the projects in China and India?
Farrell: Well, yes. I think you’re going to see a lot of what’s called public private partnerships. And that’s going to be a growing factor around the world. General Electric came out with its earnings report. It was a good earnings report. And what’s fascinating is that infrastructure makes up about 40 percent of their total revenue. So I think the story will be public private partnerships, but also: What do governments do when economies slow down? They want to kind of boost some spending, they want to get people employed. And a classic tactic is they borrow lots of money and they work on infrastructure.
Jagow: But those kinds of projects — infrastructure projects — are notorious for their corruption and waste also. So is it really going to be beneficial to throw a lot of money and those kinds of things?
Farrell: Yes. How many bridges to nowhere are going to be constructed over the next five to 10 years? You’re absolutely right. Nevertheless, I think this is a classic example of there will be corruption, there will be people taking money out of these projects. But you will end up with a better rail system, you’ll end up with a better road system, more airports will be built, more bridges will be repaired or built. So net-net, these economies will benefit.
Jagow: All right. Chris Farrell, our economics correspondent. Thanks.
Farrell: Thanks a lot.
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