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Growth and project finance in the least developed countries

Author

Listed:
  • Lisbeth F. la Cour

    (Department of Economics, Copenhagen Business School, Porcelaenshaven 16A, 2000 Frederiksberg, Denmark)

  • Jennifer Müller

    (Houverather Heide 3, 41812 Erkelenz, Germany)

Abstract

This article examines the effects of project finance on economic growth in the least developed countries (LDC). Inspired by the neoclassical growth model we set up an econometric model to estimate the effects of project finance for a sample consisting of 38 of the least developed countries using data from the period 1994-2007. The results of our study suggest, that project finance has a significant positive effect on economic growth and therefore constitute an important source of financing in the selected set of countries. Additionally, the project sheds light on other factors of importance for economic growth in LDCs. We find that a higher regulatory quality, lower government consumption and a higher level of education helps increase growth. The significance of these variables are, however, not as consistently robust as the results for project finance.

Suggested Citation

  • Lisbeth F. la Cour & Jennifer Müller, 2014. "Growth and project finance in the least developed countries," International Journal of Business and Economic Sciences Applied Research (IJBESAR), Democritus University of Thrace (DUTH), Kavala Campus, Greece, vol. 7(2), pages 77-103, September.
    • Handle: RePEc:tei:journl:v:7:y:2014:i:2:p:77-103
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    References listed on IDEAS

    as
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    3. Alfaro, Laura & Chanda, Areendam & Kalemli-Ozcan, Sebnem & Sayek, Selin, 2004. "FDI and economic growth: the role of local financial markets," Journal of International Economics, Elsevier, vol. 64(1), pages 89-112, October.
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    6. Sushil Kumar Haldar & Girijasankar Mallik, 2010. "Does Human Capital Cause Economic Growth? A Case Study of India," International Journal of Business and Economic Sciences Applied Research (IJBESAR), Democritus University of Thrace (DUTH), Kavala Campus, Greece, vol. 3(1), pages 7-25, July.
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    Cited by:

    1. Jakob Müllner, 2017. "International project finance: review and implications for international finance and international business," Management Review Quarterly, Springer, vol. 67(2), pages 97-133, April.

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    Keywords

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    JEL classification:

    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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