Scaling Up Quality Infrastructure Investment
Scaling Up Quality Infrastructure Investment

Author: International Monetary Fund

Publisher: International Monetary Fund

Published: 2021-04-30

Total Pages: 32

ISBN-13: 1513582453

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South Asia needs large infrastructure investments to achieve its development goals, and public investment can also support the Covid-19 recovery. Regression estimates that account for the quantity and quality of investment suggest that public infrastructure was a key driver of productivity growth in South Asia. Going forward, higher public infrastructure spending can raise growth, but its benefits depend on how it is financed and managed. Model simulations show that tax financing, concessional lending, or private sector financing through public private partnerships (PPPs) are more advantageous than government borrowing through financial markets because they support growth while containing the impact on public debt. However, the optimal choice also depends on available fiscal space, taxation capacity, implementation risks, and public investment efficiency. To reap the most benefits from higher infrastructure investment, South Asian countries need to manage fiscal risks carefully, including from PPPs and state-owned enterprises, and improve public investment efficiency.

Investing in Public Infrastructure
Investing in Public Infrastructure

Author: Manoj Atolia

Publisher: International Monetary Fund

Published: 2017-05-04

Total Pages: 44

ISBN-13: 147559593X

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Why do governments in developing economies invest in roads and not enough in schools? In the presence of distortionary taxation and debt aversion, the different pace at which roads and schools contribute to economic growth turns out to be central to this decision. Specifically, while costs are front-loaded for both types of investment, the growth benefits of schools accrue with a delay. To put things in perspective, with a “big push,” even assuming a large (15 percent) return differential in favor of schools, the government would still limit the fraction of the investment scale-up going to schools to about a half. Besides debt aversion, political myopia also turns out to be a crucial determinant of public investment composition. A “big push,” by accelerating growth outcomes, mitigates myopia—but at the expense of greater risks to fiscal and debt sustainability. Tied concessional financing and grants can potentially mitigate the adverse effects of both debt aversion and political myopia.

From Global Savings Glut to Financing Infrastructure
From Global Savings Glut to Financing Infrastructure

Author: Mr.Rabah Arezki

Publisher: International Monetary Fund

Published: 2016-02-09

Total Pages: 47

ISBN-13: 1475591837

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This paper investigates the emerging global landscape for public-private co-investments in infrastructure. The creation of the Asian Infrastructure Investment Bank and other so-called “infrastructure investment platforms” are an attempt to tap into the pool of both public and private long-term savings in order to channel the latter into much needed infrastructure projects. This paper puts these new initiatives into perspective by critically reviewing the literature and experience with public private partnerships in infrastructure. It concludes by identifying the main challenges policy makers and other actors will need to confront going forward and to turn infrastructure into an asset class of its own.

Does Infrastructure Investment Lead to Economic Growth Or Economic Fragility? Evidence from China
Does Infrastructure Investment Lead to Economic Growth Or Economic Fragility? Evidence from China

Author: Atif Ansar

Publisher:

Published: 2016

Total Pages: 35

ISBN-13:

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China's three-decade infrastructure investment boom shows few signs of abating. Is China's economic growth a consequence of its purposeful investment? Is China a prodigy in delivering infrastructure from which rich democracies could learn? The prevalent view in the economics literature and policies derived from it is that a high level of infrastructure investment is a precursor to economic growth. China is held up as a model to emulate. Politicians in rich democracies display awe and envy of the scale of infrastructure Chinese leaders are able to build. Based on the largest dataset of its kind, this paper punctures the twin myths that (i) infrastructure creates economic value, and that (ii) China has a distinct advantage in its delivery. Far from being an engine of economic growth, the typical infrastructure investment fails to deliver a positive risk-adjusted return. Moreover, China's track record in delivering infrastructure is no better than that of rich democracies. Investing in unproductive projects results initially in a boom, as long as construction is on-going, followed by a bust, when forecasted benefits fail to materialize and projects therefore become a drag on the economy. Where investments are debt-financed, overinvesting in unproductive projects results in the build-up of debt, monetary expansion, instability in financial markets, and economic fragility, exactly as we see in China today. We conclude that poorly managed infrastructure investments are a main explanation of surfacing economic and financial problems in China. We predict that, unless China shifts to a lower level of higher-quality infrastructure investments, the country is headed for an infrastructure-led national financial and economic crisis, which is likely to spread to the international economy. China's infrastructure investment model is not one to follow for other countries but one to avoid.

Foundations Of The Future: The Global Battle For Infrastructure
Foundations Of The Future: The Global Battle For Infrastructure

Author: Anthony H Rowley

Publisher: World Scientific

Published: 2020-08-04

Total Pages: 190

ISBN-13: 9811218056

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Foundations of the Future examines the geo-economic and geo-strategic implications of a growing global 'battle' to promote infrastructural connectivity across and between continents of the world. In this context, it highlights the importance of China's Belt and Road Initiative and of corresponding initiatives by the United States, Japan, India and Australia, among others.This book argues that many of the world's most advanced economies have neglected investment in basic infrastructure in recent decades, at a potential cost to their future economic and social development. It examines some of the financial and ideological constraints behind this neglect and argues that advanced economies in general need to adopt fundamental reforms in their approach to infrastructure. By emphasising the 'battle' elements of emerging infrastructure competition among major powers, the book sets out to alert policymakers to the danger of some of these powers losing out in what is becoming a race to stay ahead or even abreast of others in the bid to achieve global physical connectivity.Related Link(s)

Public Investment Efficiency in Sub-Saharan African Countries
Public Investment Efficiency in Sub-Saharan African Countries

Author: Karim Barhoumi

Publisher: International Monetary Fund

Published: 2018-07-06

Total Pages: 51

ISBN-13: 148436001X

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There is significant room to improve public investment efficiency in sub-Saharan Africa. Investment in sub-Saharan African countries is lagging vis-à-vis peers such as emerging and developing Asia as well as Latin America and the Caribbean, and the region’s infrastructure is perceived as being of relatively low quality. Improving the efficiency of sizable investment programs in the region could contribute to more solid economic growth and help achieve desired social priorities and development goals. Results point to some variability in public investment efficiency within the region. Comparing efficiency scores across country groups suggests that investment efficiency in sub-Saharan African oil exporters tends to be lower than in sub-Saharan African non-resource-intensive countries. Additionally, countries in East African Community (EAC) perform better than those in Central African Economic and Monetary Community (CEMAC) and West African Economic and Monetary Union (WAEMU). Stronger institutions could foster more efficient public investment. The regression results in this paper show a positive correlation between public investment efficiency and the quality of institutions, suggesting that devel-oping stronger institutions in sub-Saharan Africa could lead to a significant improvement in investment efficiency. This is particularly relevant for coun-tries with weak institutional quality, where governments may use capital spending as a vehicle for rent-seeking, leading to inefficient spending. Given the current drive for scaling up investment in sub-Saharan Africa, the task of improving institutions quickly should become a priority.

Toward a Framework for Assessing Private vs Public Investment in Infrastructure
Toward a Framework for Assessing Private vs Public Investment in Infrastructure

Author: Morten Lykke Lauridsen

Publisher:

Published: 2017

Total Pages:

ISBN-13:

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Significant additional resources from the private sector will be needed for infrastructure in emerging market countries if the Sustainable Development Goals are to be achieved. Close to 80 percent of all infrastructure investments are government funded in these countries, yet it is recognized that public sector investments alone will not be sufficient to bridge the infrastructure gap. Scaling up the role that private firms and investors play in infrastructure provision will require a better understanding of the advantages and disadvantages of public versus private provision, including the issues and incentives that need to be considered in order to find the right balance between the two.

Compendium of Good Practices on Quality Infrastructure 2024 Building Resilience to Natural Disasters
Compendium of Good Practices on Quality Infrastructure 2024 Building Resilience to Natural Disasters

Author: OECD

Publisher: OECD Publishing

Published: 2024-04-09

Total Pages: 100

ISBN-13: 9264938737

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This report discusses ways of enhancing government capacities to prevent, react and rebuild, thereby minimising the impact of natural disasters on infrastructure assets and operations. It identifies data, collaboration and technologies as drivers of resilience, and highlights financial resources, technical skills and regulatory frameworks as key enablers. The report presents seven actionable principles to ensure infrastructure resilience, drawing from global good practices and in-depth analyses of infrastructure projects in Colombia, Ghana, India, Indonesia, Japan, Mozambique and the United States.

Economic Analysis and Infrastructure Investment
Economic Analysis and Infrastructure Investment

Author: Edward L. Glaeser

Publisher: University of Chicago Press

Published: 2021-11-11

Total Pages: 479

ISBN-13: 022680061X

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Policy makers often call for increased spending on infrastructure, which can encompass a broad range of investments, from roads and bridges to digital networks that will expand access to high-speed broadband. Some point to the near-term macroeconomic benefits, such as job creation, associated with infrastructure spending; others point to the long-term effects of such spending on productivity and economic growth. Economic Analysis and Infrastructure Investment explores the links between infrastructure investment and economic outcomes, analyzing key economic issues in the funding and management of infrastructure projects. It includes new research on the short-run stimulus effects of infrastructure spending, develops new estimates of the stock of US infrastructure capital, and explores incentive aspects of public-private partnerships with particular attention to their allocation of risk. The volume provides a reference for researchers seeking to study infrastructure issues and for policymakers tasked with determining the appropriate level and allocation of infrastructure spending.

Quality Infrastructure Investment
Quality Infrastructure Investment

Author: Naoyuki Yoshino

Publisher:

Published: 2019

Total Pages:

ISBN-13:

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High-quality infrastructure will boost regional economic development and reduce poverty and income inequality. The spill-over effects created by this high-quality infrastructure will be seen in the form of an increase in gross domestic product and tax revenue in the region. These positive effects can be utilized to address the gap between infrastructure demand and financing. Private−public partnerships (PPP) in infrastructure have been advocated for many years. However, PPP partners, such as insurance and pension funds, have been discouraged by the low rate of return from investing in quality infrastructure projects. This is because the main sources of revenue from infrastructure investment are user charges. This paper aims to provide a new mechanism for government and investors to utilize the spill-over effects of infrastructure projects and share them with infrastructure investors for a better rate of return in order to compensate their risk. This mechanism will motivate stakeholders to design infrastructure with high economic benefits and encourage instruments, such as city infrastructure concepts, hometown investment trusts, land trusts, and the improvement of education and digital literacy, to ensure the infrastructure projects will create positive spill-overs to the region. Hometown investment trust funds can provide financing for start-up businesses along with the new infrastructure investments. Land trusts will solve the issue of owners not wanting to sell their land by giving them the option to keep it and lease the land to infrastructure companies. The landowners can receive long-term rent income, for example for 99 years. In this way, land trusts will smoothen the use of land and transfer the usage rights to infrastructure companies.