New Structural Economics and Resource Financed Infrastructure

Pacific Economic Review, 21: 1 (2016) pp. 102–117 doi: 10.1111/1468-0106.12154

Posted: 6 Dec 2018

See all articles by Yan Wang

Yan Wang

Cornell University; African Development Bank

Justin Y. Lin

Peking University - China Center for Economic Research

Multiple version iconThere are 2 versions of this paper

Date Written: October 10, 2016

Abstract

Two new development banks have been established: the New Development Bank and the Asian Infrastructural Investment Bank (AIIB). However, what conceptual framework will they formulate? This paper addresses infrastructural financing issues from the angle of structural transformation as a strategy for global development. Based on the new structural economics (Lin, 2010, 2012a) we stress the ‘real’ side of transforming natural resources to productive assets using the resource financed infrastructure. As one of the innovative instruments, this approach could, first, combine two otherwise isolated supply chains, resource extraction and infrastructure building, and, thereby, bring developmental results many years ahead of what other conventional approaches could. Second, this could serve as one of the ‘least-cost’ options for developing countries, and benefit borrowers disproportionately due to its feature of ‘non-recourse’ loans. Finally, in a low-yield environment, the rate of return from investing in bottleneck-releasing infrastructure could be attractive to many investors. Future prospects of development financing, including the ‘one belt one road’ initiative are discussed.

Keywords: Infrastructure finance, resource financed infrastructure, new structural economics

JEL Classification: O10, F21, H54

Suggested Citation

Wang, Yan and Lin, Justin Yifu, New Structural Economics and Resource Financed Infrastructure (October 10, 2016). Pacific Economic Review, 21: 1 (2016) pp. 102–117 doi: 10.1111/1468-0106.12154. Available at SSRN: https://ssrn.com/abstract=3264318

Yan Wang (Contact Author)

Cornell University ( email )

Ithaca, NY 14853
United States

African Development Bank ( email )

Rue Joseph Anoma
Abidjan, Ivory Coast 01 BP 1387
Ivory Coast (Cote D'ivoire)

Justin Yifu Lin

Peking University - China Center for Economic Research ( email )

No. 38 Xueyuan Road
Haidian District
Beijing, Beijing 100871
China

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