Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

The Global Infrastructure Boom


Growth trend persists in emerging markets.

"There's no sign that this global infrastructure boom is slowing at all."
Jeffrey Immelt, CEO, General Electric (GE)

China, India and other growing economies are complete beginners in building their basic infrastructure needs. To gain perspective on where they are today it helps to think back to the early stages of development in the U.S. The eighteenth century got the ball rolling, but the explosion in activity was yet to come. Roads, bridges, ports, facilities and power plants had to be built quickly to keep pace with America's rapid growth.

Simon Kuznets, a Russian-born economist and a Nobel Prize winner in Economics in 1971 explains it best in one of his theories, known as the "Kuznets cycle." He postulates that developing economies go through a period of infrastructure boom that lasts 15 to 20 years. During these years, the intense need for infrastructure creates jobs; the new jobs fuel wealth creation; and the newly created wealth fuels more infrastructure demand in a continuous feedback loop.

The Kuznets cycle years are profitable because of the strong return on investment infrastructure provides. For example, think about President Eisenhower's big push for an interstate highway system in the 1950s. Considering how heavily America now relies on its interstate links, that highway system was a wise investment.

Emerging markets can see a similar level of return on investment for the basics they're now building. Trillions of dollars will be spent on infrastructure projects ranging from power plants, roads and bridges to schools, terminals and ports. There will be ample opportunities in this sector.

Take a look at a long term Dow Jones Industrial Averages chart – which dates back to 1896 – and you can get a sense of what's possible for emerging markets today. I want to own infrastructure plays for the long term.
< Previous
  • 1
Next >
No positions in stocks mentioned.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.

Featured Videos