What exactly are 'shovel-ready' projects?
The term “shovel ready” has characterised debates on post-COVID economic recoveries, with the World Bank arguing that developing “shovel ready” projects and drafting policies conducive to them are crucial components to ensure investments boost short-term employment and promote long-term sustainability. Hence, being “shovel ready” entails government readiness to invest in the necessary infrastructure projects that spearhead a rapid but sustainable economic recovery. Yet, however widely used, the term lacks a standardised definition. We have scanned recent literature and news to provide a clearer understanding of existing definitions as well as applications of the term, and thereafter its implications to shape strategies going forward.
“Shovel ready” was popularised by Barack Obama in late 2008 to describe infrastructure projects that could benefit from increased stimulus spending. It refers to projects that are ready to go in terms of funneling in the necessary spending, have obtained the necessary approvals and licenses, and are therefore ready for construction and employment. Thus, investing in “shovel-ready” projects has been considered an important step in filling in the infrastructure gap across the developing world. In the context of a green recovery more specifically, it entails prioritising green infrastructure projects, particularly in renewable energy generation, the built environment, transport and e-connectivity, to ensure economic recoveries are not locked into unsustainable production methods. Often, a critical component of green recovery programmes is also ensuring that investments contribute to the creation of ‘green’ jobs.
In this context, it is important to seek a clear, perhaps more standardised definition to guide government investment efforts. While it is true that there are positive ripple effects from spending on infrastructure for employment, spending (especially public sector spending) takes a long time and often these “shovel ready” projects do not materialise as quickly as is visualised. Thus, regarding green infrastructure, it is important to properly identify a subset of projects that can realistically be implemented at the detailed speed. This ensures that the material benefits from investing in green “shovel ready”projects – green jobs, reduced greenhouse gas emissions, and high-quality infrastructure to give the economy a sustainable short- and long-term boost –emerge within the desired and required time frame.
The “shovel ready” rhetoric has featured in discussions on post-COVID (as well as pre-COVID) infrastructure development inSoutheast Asia, a region with a significant infrastructure gap. According to the Asian Development Bank, developing Asia would require around USD 1.7 trillion a year in infrastructure investments from 2016 to 2030 if it wishes to maintain its growth momentum. At present, however, it is only investing USD 881 billion a year. Consequently, debates leading up to Malaysia’s stimulus package emphasised the need to maintain government spending to boost economic growth despite financial strains by investing in “shovel ready” infrastructure projects that can be acted on relatively quickly, thereby improving public goods provision, driving goods and services consumption and ultimately giving the economy a short-term boost. In the Philippines, the shovel readiness of Duterte’s infrastructure plans have been discussed in terms of their continuity, implying that developing “shovel ready” projects are key to ensuring a long-term view to infrastructure development across and beyond the political cycle.
Yet despite the region’s vulnerability to climate change, debates seem to make limited reference to developing green “shovel ready” projects. This may see Southeast Asian economies locked into unsustainable growth pathways. Should the regional infrastructure gap be filled in a sustainable way, recovery programmes and policies should be drafted with this in mind. Failing to capitalise on this means missing an important opportunity to leapfrog into greener recovery pathways.