Institutional Investment in Infrastructure in Emerging Markets and Developing Economies

PPIAF Publication, 2014

68 Pages Posted: 11 Sep 2014  

Georg Inderst

Inderst Advisory

Fiona Stewart

Organization for Economic Co-Operation and Development (OECD)

Date Written: March 1, 2014

Abstract

This study discusses the role of institutional investors in financing infrastructure in emerging markets and developing economies (EMDEs). It analyzes the present level of involvement as well as the future investment potential of new financing sources such as public and private pension funds, insurance companies, and sovereign wealth funds. Current investment volumes are still low, but interesting, practical examples can be found in a range of countries and projects. International and domestic investors apply a variety of investment approaches in developing countries, using different equity, debt and fund instruments.

This overview can yield some lessons for policy makers and investors. There are (more or less) favorable pre-conditions for successful private-investor involvement, and different models work in different situations, depending on the development stage and the institutional environment. Four types of “leadership models” are therefore described for international and/or domestic investors seeking to spearhead infrastructure investment in EMDEs.

Keywords: Infrastructure investment, institutional investors, pension funds, emerging markets, developing economies, PPP

JEL Classification: G15, G18, G22, G23, G28, H54, J26, L9, O16, O19

Suggested Citation

Inderst, Georg and Stewart, Fiona, Institutional Investment in Infrastructure in Emerging Markets and Developing Economies (March 1, 2014). PPIAF Publication, 2014. Available at SSRN: https://ssrn.com/abstract=2494261 or http://dx.doi.org/10.2139/ssrn.2494261

Georg Inderst (Contact Author)

Inderst Advisory ( email )

4 Evangelist Road
GB London, NW5 1UB
United Kingdom

Fiona Stewart

Organization for Economic Co-Operation and Development (OECD) ( email )

2 rue Andre Pascal
Paris Cedex 16, 75775
France

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