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Financing Infrastructure

Author

Listed:
  • Luiz de Mello

    (Deputy Chief of Staff of the Secretary-General)

  • Douglas Sutherland

    (OECD)

Abstract

The need for infrastructure building, replacement and updating is large worldwide and governments - particularly subnational governments - will need to mobilise budgetary resources while simultaneously restoring public finances to sound health and meeting other spending pressures. This paper considers the factors affecting investment in infrastructure (with an emphasis on fixed networks), the specific characteristics of the different financing modalities applicable to subnational governments and highlights the challenges that are specific to subnational governments. In order to rise to the challenge, subnational governments will need to enhance their capacity to raise own revenue, to make the most of intergovernmental grants and transfers, and to mobilise private-sector funds, including by tapping capital markets, where permitted. In order to exploit fully the various financing options, subnational governments in many countries will need to strengthen their technical capacity to design and implement investment projects, as well as manage increasingly complex, multi-year budgets, especially when there is private sector involvement.

Suggested Citation

  • Luiz de Mello & Douglas Sutherland, 2014. "Financing Infrastructure," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper1409, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
  • Handle: RePEc:ays:ispwps:paper1409
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    File URL: http://icepp.gsu.edu/files/2015/03/ispwp1409.pdf
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    References listed on IDEAS

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    4. Luiz de Mello & Santiago Lago-Pe-as, 2013. "Local government cooperation for joint provision: the experiences of Brazil and Spain with inter-municipal consortia," Chapters,in: The Challenge of Local Government Size, chapter 9, pages 221-241 Edward Elgar Publishing.
    5. Kappeler, Andreas & Välilä, Timo, 2008. "Fiscal federalism and the composition of public investment in Europe," European Journal of Political Economy, Elsevier, vol. 24(3), pages 562-570, September.
    6. Sebastian G. Kessing & Kai A. Konrad & Christos Kotsogiannis, 2007. "Foreign direct investment and the dark side of decentralization," Economic Policy, CEPR;CES;MSH, vol. 22, pages 5-70, January.
    7. Hulten, Charles R. & Schwab, Robert M., 1997. "A fiscal federalism approach to infrastructure policy," Regional Science and Urban Economics, Elsevier, vol. 27(2), pages 139-159, April.
    8. Luiz R. De Mello Jr., 2001. "Fiscal Decentralization and Borrowing Costs: The Case of Local Governments," Public Finance Review, , vol. 29(2), pages 108-138, March.
    9. Pranab Bardhan & Dilip Mookherjee, 2006. "Decentralisation and Accountability in Infrastructure Delivery in Developing Countries," Economic Journal, Royal Economic Society, vol. 116(508), pages 101-127, January.
    10. Tomasz Koźluk, 2010. "How the Transport System can Contribute to Better Economic and Environmental Outcomes in the Netherlands," OECD Economics Department Working Papers 804, OECD Publishing.
    11. Douglas Sutherland & Sónia Araújo & Balázs Égert & Tomasz Kozluk, 2011. "Public Policies and Investment in Network Infrastructure," OECD Journal: Economic Studies, OECD Publishing, vol. 2011(1), pages 1-23.
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