IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/51011.html
   My bibliography  Save this paper

Financing Utilities: How the Role of the European Investment Bank shifted from regional development to making markets

Author

Listed:
  • Clifton, Judith
  • Diaz Fuentes, Daniel
  • Revuelta, Julio

Abstract

In the face of continuing financial and economic crises, the European Investment Bank (EIB) has been criticized for being overly-conservative in its loans to Europe. Critics in particular have called on the EIB to vastly increase its investment in utilities as a counter-cyclical measure. To take stock and, in order to evaluate the role of the EIB in financing utilities over time, we compile and analyze an original database of all EIB utilities project loans from 1958 to 2004. We find the EIB started out by functioning as a regional development bank, prioritizing utilities finance in its members’ poorer zones; however, energy crises in the 1970s marked a shift whereby the logic of EIB finance to utilities became more politically-oriented. By the 1980s, utilities projects supported by the EIB were intimately related to those required for the Single Market. The origins of the EIB’s current conservative approach to utilities loans was born in the 1970s and fully consolidated by the 1990s.

Suggested Citation

  • Clifton, Judith & Diaz Fuentes, Daniel & Revuelta, Julio, 2013. "Financing Utilities: How the Role of the European Investment Bank shifted from regional development to making markets," MPRA Paper 51011, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:51011
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/51011/1/MPRA_paper_50557.pdf
    File Function: original version
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Debra Johnson & Colin Turner, 2007. "Strategy and Policy for Trans-European Networks," Palgrave Macmillan Books, Palgrave Macmillan, number 978-0-230-21066-0.
    2. Byatt, Ian, 2013. "The regulation of water services in the UK," Utilities Policy, Elsevier, vol. 24(C), pages 3-10.
    3. Orcan Cortuk, 2013. "A disaggregated approach to the determination of government spending multipliers," Journal of Economic Policy Reform, Taylor and Francis Journals, vol. 16(1), pages 31-45.
    4. Graham Bird & Dane Rowlands, 2001. "IMF lending: how is it affected by economic, political and institutional factors?," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 4(3), pages 243-270.
    5. Griffith-Jones, Stephany & Tyson, Judith, 2013. "The European Investment Bank: Lessons for Developing Countries," WIDER Working Paper Series 019, World Institute for Development Economic Research (UNU-WIDER).
    6. Justin Lin & David Rosenblatt, 2012. "Shifting patterns of economic growth and rethinking development," Journal of Economic Policy Reform, Taylor and Francis Journals, vol. 15(3), pages 171-194.
    7. Dani Rodrik, 2006. "Goodbye Washington Consensus, Hello Washington Confusion? A Review of the World Bank's Economic Growth in the 1990s: Learning from a Decade of Reform," Journal of Economic Literature, American Economic Association, vol. 44(4), pages 973-987, December.
    8. Harrigan, Jane & Wang, Chengang & El-Said, Hamed, 2006. "The economic and political determinants of IMF and world bank lending in the Middle East and North Africa," World Development, Elsevier, vol. 34(2), pages 247-270, February.
    9. Morrison, Kevin M., 2011. "As the World Bank Turns: Determinants of IDA Lending in the Cold War and After," Business and Politics, Cambridge University Press, vol. 13(2), pages 1-27, August.
    10. Galambos, Louis & Milobsky, David, 1995. "Organizing and Reorganizing the World Bank, 1946–1972: A Comparative Perspective," Business History Review, Cambridge University Press, vol. 69(2), pages 156-190, July.
    11. Jos� M. Alonso & Judith Clifton & Daniel Díaz-Fuentes & Marcos Fernández-Guti�rrez & Julio Revuelta, 2013. "The race for international markets: Were privatized telecommunications incumbents more successful than their public counterparts?," International Review of Applied Economics, Taylor & Francis Journals, vol. 27(2), pages 215-236, March.
    12. Morrison Kevin M, 2011. "As the World Bank Turns: Determinants of IDA Lending in the Cold War and After," Business and Politics, De Gruyter, vol. 13(2), pages 1-29, August.
    13. Millward,Robert, 2005. "Private and Public Enterprise in Europe," Cambridge Books, Cambridge University Press, number 9780521835244.
    14. Nick Robinson, 2009. "The European Investment Bank: The EU's Neglected Institution," Journal of Common Market Studies, Wiley Blackwell, vol. 47, pages 651-673, June.
    15. Griffith-Jones, Stephany & Tyson, Judith & Calice, Pietro, 2011. "The European Investment Bank and SMEs: key lessons for Latin America and the Caribbean," Financiamiento para el Desarrollo 5216, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    16. Orcan Cortuk, 2013. "A disaggregated approach to the determination of government spending multipliers," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 16(1), pages 31-45, March.
    17. Stephany Griffith-Jones & Judith Tyson, 2013. "The European Investment Bank: Lessons for Developing Countries," WIDER Working Paper Series wp-2013-019, World Institute for Development Economic Research (UNU-WIDER).
    18. Rodrik, Dani, 1995. "Why is there Multilateral Lending?," CEPR Discussion Papers 1207, C.E.P.R. Discussion Papers.
    19. Justin Lin & Xifang Sun & Ye Jiang, 2013. "Endowment, industrial structure, and appropriate financial structure: a new structural economics perspective," Journal of Economic Policy Reform, Taylor and Francis Journals, vol. 16(2), pages 109-122.
    20. Estache, Antonio, 2010. "Infrastructure finance in developing countries: An overview," EIB Papers 8/2010, European Investment Bank, Economics Department.
    21. Justin Yifu Lin & Xifang Sun & Ye Jiang, 2013. "Endowment, industrial structure, and appropriate financial structure: a new structural economics perspective," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 16(2), pages 109-122, June.
    22. Inge Kaul, 2012. "Global Public Goods: Explaining their Underprovision," Journal of International Economic Law, Oxford University Press, vol. 15(3), pages 729-750, September.
    23. Knieps, Gunter, 1993. "Competition, coordination and cooperation : A disaggregated approach to transportation regulation," Utilities Policy, Elsevier, vol. 3(3), pages 201-207, July.
    24. Trillas, Francesc, 2010. "Electricity and telecoms reforms in the EU: Insights from the economics of federalism," Utilities Policy, Elsevier, vol. 18(2), pages 66-76, June.
    25. Massarutto, Antonio & Ermano, Paolo, 2013. "Drowned in an inch of water," Utilities Policy, Elsevier, vol. 24(C), pages 20-31.
    26. William J. Hausman & Mira Wilkins & John L. Neufeld, 2007. "Global Electrification. Multinational Enterprise and International Finance in the History of Light and Power, 1880s-1914," Revue économique, Presses de Sciences-Po, vol. 58(1), pages 173-190.
    27. Florio, Massimo, 2013. "Network Industries and Social Welfare: The Experiment that Reshuffled European Utilities," OUP Catalogue, Oxford University Press, number 9780199674855.
    28. Justin Yifu Lin & David Rosenblatt, 2012. "Shifting patterns of economic growth and rethinking development," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 15(3), pages 171-194, September.
    29. Alacevich, Michele, 2011. "The World Bank and the politics of productivity: the debate on economic growth, poverty, and living standards in the 1950s," Journal of Global History, Cambridge University Press, vol. 6(1), pages 53-74, March.
    30. D. A. Pinder, 1986. "Small Firms, Regional Development and The European Investment Bank," Journal of Common Market Studies, Wiley Blackwell, vol. 24(3), pages 171-186, March.
    31. Judith Clifton & Pierre Lanthier & Harm Schröter, 2011. "Regulating and deregulating the public utilities 1830--2010," Business History, Taylor & Francis Journals, vol. 53(5), pages 659-672, August.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Biancone, Paolo Pietro & Radwan, Maha, 2018. "Sharia-Compliant financing for public utility infrastructure," Utilities Policy, Elsevier, vol. 52(C), pages 88-94.
    2. Marco FRIGERIO & Daniela VANDONE, 2018. "Virtuous or Vicious? Development Banks in Europe," Departmental Working Papers 2018-07, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
    3. Clò, Stefano & Frigerio, Marco & Vandone, Daniela, 2022. "Financial support to innovation: The role of European development financial institutions," Research Policy, Elsevier, vol. 51(10).
    4. Bel, Germà & Bel-Piñana, Paula & Rosell, Jordi, 2017. "Myopic PPPs: Risk allocation and hidden liabilities for taxpayers and users," Utilities Policy, Elsevier, vol. 48(C), pages 147-156.
    5. Zeilbeck, Severin, 2015. "An investment initiative for fiscally constrained EU member states: The role of synergetic financial instruments," IPE Working Papers 58/2015, Berlin School of Economics and Law, Institute for International Political Economy (IPE).
    6. Adeyemi Adebayo, 2022. "What Do State-Owned Development Financial Institutions (Sodfis) In South Africa Do?," Economic Annals, Faculty of Economics and Business, University of Belgrade, vol. 67(235), pages 123-152, October –.
    7. Frigerio, Marco & Vandone, Daniela, 2020. "European development banks and the political cycle," European Journal of Political Economy, Elsevier, vol. 62(C).
    8. Daniel Mertens & Matthias Thiemann, 2019. "Building a hidden investment state? The European Investment Bank, national development banks and European economic governance," SciencePo Working papers Main hal-01621785, HAL.
    9. Hausman, William J. & Neufeld, John L. & Schreiber, Till, 2014. "Multilateral and bilateral aid policies and trends in the allocation of electrification aid, 1970–2001," Utilities Policy, Elsevier, vol. 29(C), pages 54-62.
    10. Helen Kavvadia, 2021. "The European Investment Bank’s ‘Quantum Leap’ to Become the World’s First International Climate Bank," Politics and Governance, Cogitatio Press, vol. 9(2), pages 185-195.
    11. David Castells-Quintana & Vicente Royuela, 2018. "Spatially blind policies? Analysing agglomeration economies and European Investment Bank funding in European neighbouring countries," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 60(3), pages 569-589, May.
    12. Lanthier, Pierre, 2014. "From the Raj to Independence: British investment in the Indian electricity sector," Utilities Policy, Elsevier, vol. 29(C), pages 44-53.
    13. Del Bo, Chiara D. & Ferraris, Matteo & Florio, Massimo, 2017. "Governments in the market for corporate control: Evidence from M&A deals involving state-owned enterprises," Journal of Comparative Economics, Elsevier, vol. 45(1), pages 89-109.
    14. Liu, Yang & Zhao, Xiaomeng & Dong, Kangyin & Jiang, Qingzhe, 2023. "Assessing the role of green finance in sustainable energy investments by power utilities: Evidence from China," Utilities Policy, Elsevier, vol. 84(C).
    15. Ebeling Antoine, 2022. "European investment Bank loan appraisal, the EU climate bank ?," Working Papers of BETA 2022-10, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Judith CLIFTON & Daniel DÍAZ-FUENTES & JULIO REVUELTA, 2013. "Explaining Infrastructure Investment Decisions at the European Investment Bank 1958-2004," Departmental Working Papers 2013-06, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
    2. Kuznetsov, B. & Simachev, Yu., 2014. "Evolution of State Industrial Policy in Russia," Journal of the New Economic Association, New Economic Association, vol. 22(2), pages 152-178.
    3. Carole RENTSCH & Matthias FINGER, 2014. "Yes, no, maybe: the ambiguous relationships between State-owned enterprises and States," Departmental Working Papers 2014-05, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
    4. Justin Yifu Lin & Xiaobing Wang, 2019. "The Facilitating State and Economic Development: The Role of the State in New Structural Economics," Book, University of Warsaw, Faculty of Management, edition 1, volume 1, number y:2019:v:1:ch:6:p:123-141 edited by Justin Yifu Lin & Alojzy Z. Nowak, June.
    5. Strand, Jonathan R. & Zappile, Tina M., 2015. "Always Vote for Principle, Though You May Vote Alone: Explaining United States Political Support for Multilateral Development Loans," World Development, Elsevier, vol. 72(C), pages 224-239.
    6. Robert K. Fleck & Christopher Kilby, 2006. "World Bank Independence: A Model and Statistical Analysis of US Influence," Review of Development Economics, Wiley Blackwell, vol. 10(2), pages 224-240, May.
    7. Ali Burak Güven, 2012. "The IMF, the World Bank, and the Global Economic Crisis: Exploring Paradigm Continuity," Development and Change, International Institute of Social Studies, vol. 43(4), pages 869-898, July.
    8. Christopher Kilby, 2006. "Donor influence in multilateral development banks: The case of the Asian Development Bank," The Review of International Organizations, Springer, vol. 1(2), pages 173-195, June.
    9. Anwar, Mumtaz, 2005. "The Political Economy of International Financial Institutions? Lending to Pakistan," HWWA Discussion Papers 338, Hamburg Institute of International Economics (HWWA).
    10. Hugh Goldsmith, 2014. "The Long-Run Evolution of Infrastructure Services," CESifo Working Paper Series 5073, CESifo.
    11. Jiajun XU & Kedi WANG & Xinshun RU, 2020. "Sources de financement des banques nationales de développement," Working Paper 035349fb-de1d-4334-8a86-8, Agence française de développement.
    12. Saes, Alexandre Macchione & Loureiro, Felipe Pereira, 2014. "What developing countries' past energy policies can tell us about energy issues today? Lessons from the expropriation of American Foreign and Power in Brazil (1959–1965)," Utilities Policy, Elsevier, vol. 29(C), pages 36-43.
    13. Andrea Filippo Presbitero & Alberto Zazzaro, 2010. "The Global Crisis in Low- and Middle-Income Countries: How the IMF Responded," Mo.Fi.R. Working Papers 35, Money and Finance Research group (Mo.Fi.R.) - Univ. Politecnica Marche - Dept. Economic and Social Sciences.
    14. Castelnovo, Paolo & Del Bo, Chiara F. & Florio, Massimo, 2019. "Quality of institutions and productivity of State-Invested Enterprises: International evidence from major telecom companies," European Journal of Political Economy, Elsevier, vol. 58(C), pages 102-117.
    15. Ben Fine & Elisa Van Waeyenberge, 2013. "A Paradigm Shift that Never Will Be?: Justin Lin’s New Structural Economics," Working Papers 179, Department of Economics, SOAS University of London, UK.
    16. Yooneui Kim & Youngwan Kim, 2021. "The autonomy of international organizations? The analysis of major powers’ influence over the World Bank’s aid policies," International Area Studies Review, Center for International Area Studies, Hankuk University of Foreign Studies, vol. 24(3), pages 224-240, September.
    17. Jiajun XU & Kedi WANG & Xinshun RU, 2020. "Funding Sources of National Development Banks," Working Paper 035349fb-de1d-4334-8a86-8, Agence française de développement.
    18. Essers, Dennis & Ide, Stefaan, 2019. "The IMF and precautionary lending: An empirical evaluation of the selectivity and effectiveness of the Flexible Credit Line," Journal of International Money and Finance, Elsevier, vol. 92(C), pages 25-61.
    19. Clò, Stefano & Florio, Massimo & Rentocchini, Francesco, 2020. "Firm ownership, quality of government and innovation: Evidence from patenting in the telecommunication industry," Research Policy, Elsevier, vol. 49(5).
    20. Mariana Mazzucato & Caetano C.R. Penna, 2016. "Beyond market failures: the market creating and shaping roles of state investment banks," Journal of Economic Policy Reform, Taylor and Francis Journals, vol. 19(4), pages 305-326, October.

    More about this item

    Keywords

    Infrastructure policy. International Financial Institutions. European Investment Bank. Economic Development. European Union.;

    JEL classification:

    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • F53 - International Economics - - International Relations, National Security, and International Political Economy - - - International Agreements and Observance; International Organizations
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • N24 - Economic History - - Financial Markets and Institutions - - - Europe: 1913-
    • N74 - Economic History - - Economic History: Transport, International and Domestic Trade, Energy, and Other Services - - - Europe: 1913-
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:51011. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.