Trends and Challenges in Infrastructure Investment in Developing Countries

Gurara, Daniel; Klyuev, Vladimir; Mwase, Nkunde; Presbitero, Andrea F.

doi:10.4000/poldev.2802

Cited by 41 publications

(34 citation statements)

References 39 publications

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“…This in turn has brought about postulations that a 10% growth in infrastructure endowment increases output per worker by about 1% in the long run (Calderon et al, 2015). To sum up, infrastructure investment shapes economic activity in a country because it can produce long-standing economic improvements by reducing trade costs and integrating markets, possibly changing the economic setting in poor, remote regions with high trade costs (Gurara et al, 2018). For this aforementioned positive affirmation of public investment in economic growth and social change, Kodongo and Ojah (2016) assert that public investment should be in a sector that has comparative and competitive advantages.…”

Section: Background Public Investments: a Brief Literature Reviewmentioning

confidence: 99%

The determinants of public investment in Ethiopia: An ARDL approach

Tilahun¹

2021

Cogent Economics & Finance

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Public investment has shown increasing trends both in nominal and as a share of GDP over years in Ethiopia. These upsurges in public investment are believed to be due to factors that have visible impact on the fiscal posture of the country. To investigate the validity of Wagner's law in Ethiopia; this study sets determinants of public investment in Ethiopia as a general objective. Specifically, the study sought to examine the main influencing factors on level of public investment in Ethiopia along three sets of explanatory variables. In order to meet the aforementioned objective, the study employed an autoregressive distributed lag (ARDL) approach over the period 1985-2019. Results from the bound tests show that there is a long-run relationship between the variables. The real per capita GDP is found to be positively and significantly impact on level of public investment which shows that there an evidence in favour of Wagner's law,i.e. public spending has a high income elasticity of demand. This study also found that there is a positive relationship between public investment and private investment which shows that two are moving in tandem. Again, the study also found that foreign aid has positive impact on public investment implying that additional foreign aid leads to larger spending of the government on capital. Moreover, the study found that the degree

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Section: Background Public Investments: a Brief Literature Reviewmentioning

confidence: 99%

The determinants of public investment in Ethiopia: An ARDL approach

Tilahun¹

2021

Cogent Economics & Finance

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“…We also assess whether mobilization effects take place in the infrastructure sector alone. We focus on infrastructure given its relevance for development and the urgent need for resources in this sector (Dobbs et al, 2013;Gurara et al, 2018;World Bank, 2018). According to UN estimates, total investment in economic infrastructure is currently under USD 1 trillion per year, but will need to reach between USD 1.6-2.5 trillion a year over the period 2015-30 (UNCTAD, 2014.…”

Section: Infrastructure Lendingmentioning

confidence: 99%

Mobilization Effects of Multilateral Development Banks

Broccolini¹,

Lotti

Maffioli³

et al. 2020

The World Bank Economic Review

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This study uses loan-level data on syndicated lending to a large sample of developing countries between 1993 and 2017 to estimate the mobilization effects of multilateral development banks (MDBs), that is, their ability to crowd-in capital from private creditors. Controlling for a large set of fixed effects, the paper shows evidence of positive and significant mobilization effects of multilateral lending on the size of bank inflows. The number of lenders and the average maturity of syndicated loans also increase. These effects are present not only on impact but last for up to three years and are not offset by a decline in bond financing. There is no evidence of anticipation effects, and the results are robust to numerous tests controlling for the role of confounding factors and unobserved heterogeneity. Finally, the results are economically sizable, indicating that MDBs can mobilize about seven dollars in bank credit over a three-year period for each dollar invested.

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“…The active actors in BRI projects are mainly state-owned or have a government background. Many projects were agreed between governments or criticised for having a lack of transparent procurement processes, or poor project selection [69]. As mentioned before, projects are mainly funded by Chinese state-owned banks.…”

Section: Issues Of Bri Projectsmentioning

confidence: 99%

Integrating Sustainable Development Goals into the Belt and Road Initiative: Would It Be a New Model for Green and Sustainable Investment?

Wei

2019

Sustainability

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Given the challenges presented by climate change and related environmental pressure, a sustainable, investment-led development model, i.e., aligning investment with social and sustainability objectives, is needed to ensure long-term prosperity and generate sustainable growth. The UN’s Sustainable Development Goals (SDGs) was released to guide nations towards green and sustainable development and address governance deficits. The Belt and Road Initiative (BRI) launched by China, a development strategy involving investment in infrastructure development, intends to enhance regional connectivity, integration, and stimulate economic growth. These two agendas share the notion of ‘sustainable development’ and are growing increasingly relevant. Although various studies have analysed the sustainability of the BRI, the implementation of SDGs and the similarities and complementarities between the two initiatives, few of them touched on the possibility of the BRI to be a green and sustainable investment-led model by aligning the SDGs. This paper, thus, aims to contribute to the ongoing debate on sustainable development and infrastructure investment by exploring the possibilities and challenges of the BRI to be a sustainable, investment-led development model. By comparing these two agendas and seeking the linkages between them, this article recognises the potential of the BRI to play such a role while there are issues and risks of BRI that hinder the achievement of infrastructure development and sustainable investment. The paper recommends that, to exert the synergies from aligning the BRI and SDGs to seize substantial development benefits, it is necessary to enhance the sustainability of BRI projects, provide effective cooperation and communication with stakeholders, and adapt BRI to the national development policies of each partner country. Joint efforts taken by both state and non-state actors are indispensable.

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Trends and Challenges in Infrastructure Investment in Developing Countries

Cited by 41 publications

References 39 publications

The determinants of public investment in Ethiopia: An ARDL approach

The determinants of public investment in Ethiopia: An ARDL approach

Mobilization Effects of Multilateral Development Banks

Integrating Sustainable Development Goals into the Belt and Road Initiative: Would It Be a New Model for Green and Sustainable Investment?

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