An appraisal framework for evaluating financing approaches for public infrastructure

Innovative financing solutions for public infrastructure megaprojects require new approaches to assess the various financing portfolios being proposed. This paper discusses a range of international financing models and presents a new multi- criteria appraisal framework for assessing alternative ways of raising capital. The proposed framework combines elements of a multi-criteria analysis and cost benefit analysis, and incorporates both monetary and intangible impact measures to facilitate the selection of a financing approach that is in society’s best interest.     

Private Participation in Infrastructure and Financial Sector Development: Evidence from Developing Countries

This article studies whether private participation in infrastructure (PPI) investments promote financial sector development (FSD). With data from 62 developing countries over the period 1990–2013, we provide evidence of a positive and significant relationship between PPI investments and FSD, irrespective of different control variables, estimation methods and measures of FSD. With heterogeneity tests, we illustrate that the promotion effect is larger in emerging countries than in the other countries; however, the difference is marginal. We also identify that both civil and common legal origins have a comparative advantage than socialist legal origin for FSD.     

Financing China’s unprecedented infrastructure boom: the evolution of capital structure from 1978 to 2015

ABSTRACT

The authors examine the sources of the funds that have financed China’s infrastructure development since 1978. They define the five periods in which this development has taken place in terms of predominant financing: fiscal funds, build-operate-transfer (BOT), treasury bonds, the land financing, and local bonds. The system is characterized by a heavy reliance on debt financing and one-off revenues. These approaches have raised widespread concerns about fiscal sustainability in China. The authors explain why a shift towards the more conventional approach of fiscal funds is necessary.     

The Evolution and Impact of Infrastructure in Middle-Income Countries: Anything Special?

We examine the evolution of infrastructure, and the impact of infrastructure investment, in middle-income countries (MICs). We document how different types of infrastructure stocks, as well as infrastructure investment, vary with the level of development and growth performance. We then use the two-stage approach of Corsetti, Meier, and Müller (2012) to identify exogenous public investment shocks and investigate the macroeconomic impact of these shocks. We find that the provision of infrastructure varies across development stages; there is a focus on basic infrastructure, such as transport, water, and sanitation, during early stages, and an emphasis on “advanced” infrastructure, such as power and especially information and communication technology, in later stages. Better-performing MICs tend to invest more on infrastructure. They also have more information and communication technology infrastructure. Finally, we find a more significant and sustained impact of exogenous public investment shocks on output in MICs than in low-income countries.     

Terrorism and Critical Infrastructures: Implications for Public–Private Crisis Management

The spate of terrorist attacks in New York, London and Madrid has raised some significant issues for the public management of critical infrastructures. In many countries, privatizations in the 1980s and 1990s have transferred key elements of the critical infrastructure to private companies. Because these infrastructures are of major significance to our societies and economies, they must be protected against prolonged periods of breakdown. The ‘new’ terrorism has the potential to do just that. The management of this new threat is a complex task, which invariably will be undertaken by both public and private actors. They must deal with the core challenges of the prevention of attacks, effective communication of information across organizational boundaries and the ‘ownership’ of crisis decision-making. This article considers these issues within the context of the broader research areas of public management and crisis management.     

Informal household preparedness: methodological approaches to everyday practices

Abstract

Despite increasing attention to individuals’ everyday lives in the literature on risk, few studies investigate household preparedness within the everyday life context. Preparedness is most often regarded as a predefined set of capacities for dealing with emergencies. This article presents methodological approaches for studying what I suggest calling informal preparedness activities that are performed as part of daily life in households. Starting with the assumption that everyday life is enacted through culturally and socially shared practices, it is argued that preparedness is interwoven into these practices. Contrary to studying preparedness as the degree to which households are aware of and act according to a formal definition of preparedness, informal household preparedness focuses on preparedness as embedded in the routinised practices that make up everyday life. The study of informal household preparedness is based on three methodological approaches that explore these practices: (i) Performance of everyday practices, where interviews that focus on performance ask questions about what practitioners actually do; (ii) materiality, where walk-alongs are used to connect performance interviews to the material surroundings; and (iii) visualisation, where the material aspects of informal preparedness are documented. These approaches were carried out in a study of Norwegian households’ management of and preparedness for electricity and Information and Communication Technology (ICT) infrastructure breakdowns. Addressing informal and formal preparedness activities expands our understanding of household preparedness and should help policy makers recognise the active role of households and their actual resources and constraints in future preparedness planning.     

New development: Accounting recognition of public infrastructure—applying a practical control criterion approach

ABSTRACT

The accounting recognition of public infrastructure can be extremely complex. This article explores and discusses the key IPSAS definitions and reviews the national accounting frameworks of some countries as regards their criteria for recognizing these assets. The author makes an important contribution to public sector accounting research by presenting a new way of recognizing public infrastructure as an asset based on the control criterion.     

Cross-country differences in the effect of political connections on stock price informativeness

Using an international sample of firms from 28 countries, we document that there exists a negative relationship between political connections and the informativeness of stock price, as measured by idiosyncratic volatility (IV). This finding is robust to alternative regression specifications, sub-samples analyses, and concerns related to endogeneity. A more detailed analysis shows that out of the different types of possible connections, the connectedness of the owners is the primary driver of this result. Further, the negative association is only significant for firms in countries characterized by low institutional quality (corrupted countries, countries with low access to external equity markets, and countries with low media penetration). There is no evidence of any relation between political connections and stock price informativeness for firms in countries characterized by high institutional quality. Overall, our results show that although political connections exacerbate rent-seeking that weaken the firms’ information environment on average, the negative information consequences are compensated by the countries’ institutional quality.     

Large Infrastructure Investments: Financing Mechanisms and Incentives in Decentralised Countries*

Infrastructure services crucially affect competitiveness and efficiency. They are essential but they usually require important amounts of public funds. In decentralised countries, regional governments cannot usually afford large infrastructure projects, so co-financing with the central government is required. The aim of this paper is to demonstrate the influence of the central government financing mechanisms on the contract offered by the regional government for the construction, maintenance and operation of the infrastructure. We prove that if the central government uses certain financing mechanisms (total cost coverage), the regional government may have no incentives to offer an efficient contract to the firm.     

中国能进一步提高央行独立性以改善货币政策可信度吗?

中央银行独立性是决定货币政策可信度(信誉)的一个重要体制性特征因素。在中国,央行独立性受到政治基础结构、司法独立性、经济金融基础结构和社会文化环境等制度结构方面的现实约束,即便照搬西方国家经验在立法层面确立央行独立性,这种外生的法定独立性也不能转化为真正的实践准则;在当下的中国要改善货币政策可信度,不能期望进一步提高央行独立性来实现,而应寻求其他路径。     

Financial Cooperative Potential Between China and Belt and Road Countries

ABSTRACT

Along with the increasingly frequent economic exchanges between China and the Belt and Road countries (BRCs), bilateral and multilateral financial integration within the region has become a current trend. This article quantifies the level of cooperative potential by designing an index based on the investment demand in China and the financing needs of the BRCs. Using this index, this article analyzes the distribution of the financial cooperative potential among the BRCs and uncovers its influencing factors. The statistical findings are that countries with higher financial cooperative potential have closer economic ties with China. These countries are mostly low-income or middle-income countries with a shortage of infrastructure investment, while their economic development is stable. The research results provide guidance for the overseas strategic layout of the Chinese financial institutions. More funds should be injected into China’s trade and investment counterparts that have stable economic growth and a strong demand for infrastructure investment, such as countries in Northeast, Central, and Southeast Asia.     

Loss and damage: a critical discourse analysis of Parties’ positions in climate change negotiations

The years-long negotiations on loss and damage (L&D) associated with climate change impacts reached a milestone with the adoption of the Paris Agreement, sanctioning the permanence of the Warsaw International Mechanism (WIM) created in 2013. The WIM aims at advancing knowledge gathering, coordination and support to address L&D associated with extreme and slow onset events in vulnerable developing countries (Decision 2/CP.19). Despite being among the most controversial issues to be recently treated in climate change negotiation, L&D has attracted little attention in the field of international relations. This paper aims at addressing this gap by reconstructing the emergence and evolution of the negotiating positions on L&D of developing and developed countries. It employs a critical discourse analytical approach and builds on Fairclough’s three-dimensional framework for critical discourse analysis, taking decision 2/CP.19 as the core communicative event. Consistently, the decision is analysed at three different levels: as a text (micro-scale); as a discursive practice (meso-scale); and as a social practice (macro-scale). The analysis makes use of a wide range of materials including previous decisions, High Level Segment statements and Parties submissions. It reconstructs Parties’ conflicting views on the positioning of L&D vis-à-vis the adaptation space (L&D as a part of, or as beyond adaptation) and the scientific, ethical and legal arguments employed to support these standpoints. It highlights, in particular, the strategic importance which the ‘compensation argument’ had in determining developing countries’ capacity to influence the UNFCCC process up to the inclusion of a specific article on L&D in the Paris Agreement. While calls for compensation might have lost momentum as a result of the Warsaw and Paris talks, the paper argues that their potential is far from exhausted. They in fact imply a more general request for climate justice which the UNFCCC has not yet addressed.     

Mobile nudging: Youth engagement with banking apps

Mobile-banking (m-banking) is of particular interest to banks seeking to sustain their market share because of m-banking’s role attracting and retaining customers, especially young ones. This article reports on a study that applies concepts from behavioural economics (BE) and ‘nudging’ with the objective of promoting young people’s ongoing engagement with m-banking applications (that is, software designed to run on mobile devices, or m-banking ‘apps’ in common parlance). Insights and ideas for new features or refinements for m-banking apps were generated from discussions with a large class of senior marketing students, and then presented to m-banking managers and app designers to refine and to select two features for each of five constructs from BE: loss aversion, power of now, scarcity value, chunking and choice architecture. The relative desirability of these 10 m-banking features was investigated via a survey involving a pairwise-ranking exercise that was completed by 257 young m-banking consumers. Overall, the research reveals that m-banking app design can benefit from fundamentally different approaches (relative to traditional methodologies) that prioritise intuitive interfaces over non-intuitive-based designs, and, in particular, that BE and nudging can supply valuable insights and ideas for new features or refinements.     

The determinants of contractual choice for private involvement in infrastructure projects

Numerous studies have examined the determinants of private participation in infrastructure projects. We depart from this simple public/private dichotomy by empirically examining a rich set of contractual arrangements. Infrastructure characteristics, particularly those that reflect ‘stand alone’ versus network characteristics, are key factors influencing the extent of private participation. Fiscal variables as well as basic controls, such as population and locality of government, increase the degree of private participation. A greater tax burden reduces private participation.     

Are wildcard events on infrastructure systems opportunities for transformational change?

Infrastructure systems face a number of pressing challenges relating to demographics, environment, finance and governance pressures. Furthermore, infrastructure mediates the way in which everyday lives are conducted; their form and function creating a persistence of unsustainable practice and behaviour that cannot be changed even if change is desired. There is a need to find means by which this obduracy can be broken so that new, more sustainable futures can be planned. This paper develops a methodology, taking concepts from both engineering and social science. Wild cards, or physical disruptions, are used to ‘destructively test’ complex infrastructure systems and the multi-level perspective is used as a framework for analysing the resulting data. This methodology was used to examine a number of case studies, and with focus groups consisting of a range of different infrastructure providers and managers, to gain a better understanding of systems’ socio-technical characteristics and behaviours. A number of impactful ‘intervention points’ emerged that offered the opportunity to promote radical changes towards configurations of infrastructure systems that provide for ‘less’ physical infrastructure. This paper also examines the utility of wild cards as enablers of transition to these ‘less’ configurations and demonstrates how a ‘wild card scenario’ can be used to co-design infrastructure adaptation from with both infrastructure providers and users.     

Aid for trade, infrastructure, and growth

Aid for trade is a new foreign aid initiative to assist recipient countries to build trade-related infrastructure. We formulate a small-country, two-good (i.e., investment and consumption goods), two-factor (i.e., capital and labor) endogenous growth model with learning by doing and intersectoral knowledge spillovers, where the import transport cost depends inversely on public infrastructure. Focusing on the case where the country is incompletely specialized and imports the investment good, we show that a permanent increase in the recipient’s aid/GDP ratio raises the steady-state growth rate if and only if the investment good is more labor-intensive.     

全球基础设施投资基金研究：投资者偏好和委托代理问题

基于2005年1月至2019年6月间公开发售的2246支来自全球的基建基金数据,本文研究基建基金投资者偏好和委托代理问题。研究结果表明:投资者偏好客户忠诚度较高、投资于国际市场、团队管理型的基建基金;在基建基金公司层面,投资者存在跟风投资行为,且随着信息不透明度和收益不确定性加剧;投资者与基金管理人存在委托代理问题,体现为基金费率与预期业绩不匹配。该现象源于基金管理人利用投资者较高的预期收益设置费率,可以由基金特征因素和年份效应解释,尤其是投资于国际市场、收益分配或非团队管理等特征。本文结论对创新基础设施融资模式、稳定资金来源和微观审慎监管具有重要借鉴意义。     

拉丁美洲养老保险改革及其对中国的启示

自20世纪80年代起拉丁美洲国家对养老保险制度进行改革,将养老保险由国家公共管理改革为私有化运营或多种模式并存的方式。拉丁美洲国家作为发展中国家,其背景、社会条件和经济实力与中国类似,可以作为中国养老保险改革的参照样板;其多样化的改革方式及复杂的改革背景可以作为实践案例对中国的养老保险改革提供参考,对中国正在进行的养老保险改革和新模式创立提供借鉴。本文从国际化的视角选取拉美国家进行案例研究,通过比较分析其各自改革的手段和效果,结合中国的实际情况进行分析借鉴;尤其针对在加速城市化背景下中国长期二元社会突显的大批城乡移民养老保险问题,根据拉美私营化改革结果,借鉴吸收其经验教训,创新性提出中国城乡移民养老保险多元化的经营模式。     

Intergenerational Equity: Treatment of Infrastructure in New Zealand Local Government Financial Planning

This paper examines how local government authorities plan and financially provide for infrastructure while considering the needs of current and future communities. In New Zealand the Local Government Act 2002 provides a mandate for local authority planning through the requirement to publish Long Term Council Community Plans (LTCCPs). Our content analysis of the LTCCPs, annual plans and annual reports of five New Zealand local authorities reveals that these local authorities make conscious decisions about infrastructure that reflect concern for matters of intergenerational equity. They do so despite problems in relation to valuation, depreciation, deferred maintenance and financing of infrastructure assets.     

How Does Infrastructure Construction Affect Economic Development along the “Belt and Road”: By Promoting Growth or Improving Distribution?

ABSTRACT

The “Belt and Road Initiative” has involved deepening infrastructure construction along the “Belt and Road”. Using data from countries who have joined the “Belt and Road”, this study examines how infrastructure construction has affected economic development along the route. Findings show that infrastructure construction can promote economic growth and per capita output growth while improving income distribution of residents along the “Belt and Road”. Results also indicate that the effect of infrastructure construction on economic development is heterogeneous; such construction can substantially increase economic growth in developing countries but has no significant effect on economic growth in developed and emerging developing countries. Infrastructure construction can greatly improve residents’ income distribution in developed and developing countries but has no significant effect on residents in emerging developing countries. Collectively, these findings identify foreign direct investment and urbanization as important channels through which infrastructure construction can influence economic development.