In this two-part series on urbanization, I will share my thoughts on how urbanization is driving infrastructure development and spending, which in turn can lay the foundation for potentially sustainable, long-term growth in emerging markets, both in terms of the economy and per capita income. Investment in infrastructure has been gathering momentum all over emerging markets, from plans to construct a high-speed train in Brazil connecting Rio De Janeiro to São Paulo, to bridges and tunnels springing up in China and India. Brazil, an export-driven economy with a large consumer market, also needs to improve its infrastructure ahead of hosting the 2014 FIFA World Cup and 2016 Olympic Games. Better infrastructure can provide the basis for potentially sustainable long-term economic growth, which in turn paves the way for interesting investment opportunities.
Over the next few decades, I believe we are likely to see an increase in several types of infrastructure investments due to rapid urbanization, which drives the increasing global demand for resources, mainly from emerging markets. I expect there will likely be many opportunities, particularly in the energy and materials sectors. Rapid urbanization in emerging markets, driven by rural populations migrating to cities in search of work and better opportunities, has put pressure on resources and prompted governments to pump money into a range of urban infrastructure-related sectors such as housing, transportation, sanitation, water, electricity and telecommunications.