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Project Finance as a Driver of Economic Growth in Low-Income Countries

  • Kleimeier Stefanie
  • Versteeg Roald

    (METEOR)

This study investigates the role of project finance as a driver of economic growth. We hypothesize that project finance is beneficial to the least developed economies as it compensates for any lack of domestic financial development. The contractual structure unique to project finance should lead to better investment management and governance. Investigating 90 countries from 1991 to 2005, we find support for our hypothesis. Project finance indeed fosters economic growth and this effect is strongest in low-income countries, where financial development and governance is weak.

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Paper provided by Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR) in its series Research Memorandum with number 011.

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Date of creation: 2009
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Handle: RePEc:unm:umamet:2009011
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