Financing Infrastructure in Developing Countries

Oxford Review of Economic Policy, Forthcoming

34 Pages Posted: 2 Sep 2015

See all articles by Antonio Estache

Antonio Estache

Université Libre de Bruxelles (ULB) - European Center for Advanced Research in Economics and Statistics (ECARES)

Tomas Serebrisky

Inter-American Development Bank (IDB)

Liam Wren-Lewis

Paris School of Economics (PSE)

Date Written: February 4, 2015

Abstract

This article develops a theoretical framework to analyze options for financing infrastructure in developing countries. We build a basic model that gives motivations for using a combination of public finance, private debt and private equity. The model is then extended in a number of ways to examine a variety of factors that are important for developing countries when considering financing choices. We focus in particular on key institutional weaknesses that are often important for infrastructure investment. Overall, we show that such weaknesses can be key in determining financing choices, but that they do not all push in the same direction. Financing schemes must therefore be adapted to consider the institutional limitations that are most pertinent in any given context.

Keywords: Finance, Development, Infrastructure

JEL Classification: G32, G38, H54, O16

Suggested Citation

Estache, Antonio and Serebrisky, Tomas and Wren-Lewis, Liam, Financing Infrastructure in Developing Countries (February 4, 2015). Oxford Review of Economic Policy, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2654287

Antonio Estache

Université Libre de Bruxelles (ULB) - European Center for Advanced Research in Economics and Statistics (ECARES) ( email )

Ave. Franklin D Roosevelt, 50 - C.P. 114
Brussels, B-1050
Belgium
32 (0)2 6503838 (Phone)

Tomas Serebrisky

Inter-American Development Bank (IDB) ( email )

1300 New York Avenue NW
Washington, DC 20577
United States

Liam Wren-Lewis (Contact Author)

Paris School of Economics (PSE) ( email )

48 Boulevard Jourdan
Paris, 75014 75014
France

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