Capital Markets, Infrastructure Investment and Growth in the Asia Pacific Region

Abstract

This paper examines the relationship between infrastructure investment activity, capital market development, the role of public institutions and economic development in the Asia Pacific. It adopts a review approach drawing on empirical evidence over recent decades. Infrastructure is shown to be an important asset class playing a central role in a nation's output, growth, productivity and microeconomic performance. Infrastructure investment also requires investment and predictions of a widening gap in the future supply of infrastructure in the Asia Pacific will require new forms of capital from both traditional and new sources including wider use of private participation, institutional investment, asset recycling and revenue bonds. Capital market development is also necessary to raise long-term local currency finance and evidence suggests that progress with regional capital market integration is slow and a continuing reform agenda is required. The dividend for regional countries is the prospect of higher levels of economic growth with infrastructure investment, capital market development, and foreign direct investment shown to have a strong and positive association with growth. A crucial link in this association identified in the review is the part played by national and regional institutions in improving the efficiency with which infrastructure is managed and providing promising ground for further research where the importance of these links can be researched in greater depth.

Taking a Holistic Exploration of the Project Life Cycle in Public–Private Partnerships

“…As a result of extensive criticism and the innate deficiencies of traditional procurement methods, alternative approaches have been used by the public sector that re-define contractual roles, responsibilities, and risk allocation (Regan et al, 2015). Moreover, in the pursuit of value for money (V f M) and efficiency gains throughout an asset’s life cycle, there has been an increasing shift by the public sector to engage in private participation in infrastructure (PPI) initiatives to finance, maintain, operate and, in some cases, dispose of assets (Regan, 2017). Procurement approaches that have been used to support PPI initiatives include public–private partnership (PPP), design–build–operate–maintain (DBOM), build–own–operate–transfer (BOOT), and variants thereof (Turner, 2004).…”

“…Although these procurement options form an integral part of the asset delivery strategies of many public-sector agencies (Regan, 2017) across the globe (Costantino & Pellegrino, 2015), there has been a paucity of attention paid to their management during the operations stage (Liu, Love, Davis, Smith, & Regan, 2015a) particularly when considering the entirety of the project life cycle (Liu et al, 2018). Perhaps contributing to this situation is that literature has paid limited attention to the specific temporalities of long-term project organizing (Brookes, Sage, Dainty, Locatelli, & Whyte, 2017).…”

The Role of Infrastructure Loan in the Regional Development Bank

“…There are seven options available to finance infrastructure. The options are budget reallocation from the government, privatization, raising taxes, public debt, tax-exempt bonds, revenue bonds, and private financing (Regan 2017). In private financing, the government may depend on the role of development banks as an agent of development in providing the necessary funds.…”

Bangladesh: 2017 Article IV Consultation-Press Release; Staff Report

“…It has long been recognized that the development of local capital markets brings several benefits to savers and borrowers, including governments (Laeven, 2014 andRegan, 2017): 1…”

“…Numerous studies have looked at the impact of capital market developments on economic performance (see Regan, 2017, for an overview of the literature). In general, studies find a positive association between capital market development and economic growth, but also evidence of a two-way association-economic growth also supports capital market development.…”