This article explores how growth of the finance sector can overtake growth in the "real" economy, including manufacturing or trade, and depress wages as returns to capital are protected or increased. In developing and emerging countries, financialisation deepens the vulnerability of local financial systems when they are subject to the volatility of global capital markets and the interest rate decisions of large countries, particularly the US. Without proper controls, financialization can redirect the development process towards securing the profits of private companies and private finance.
The Investment Plan for Europe, the Program for Infrastructure Development in Africa, and the Chinese Belt and Road Initiative all seek to promote infrastructure investment - but involve significant risks regarding environmental sustainability, social impacts, and unfavorable technological lock-ins for the next decades.
Infrastructure is essential to the achievement of the sustainable development goals (SDGs) and to the success of the Paris Agreement on Climate Change. Our partner IISD presents why governments must invest in sustainable infrastructure and how they can integrate sustainability into infrastructure contracts.