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Infrastructure project finance and capital flows : a new perspective

  • Dailami, Mansoor
  • Leipziger, Danny

The success with which middle-income indebted developing countries have gained access to private international finance in the 1990s is a tribute to their own domestic economic performance, international policy in dealing with the debt crisis of the 1980s, and innovation in international financial markets. Emphasizing the role of private infrastructure investment as a vehicle for attracting foreign capital to developing countries in the 1990s, the authors develop an analysis model to examine what determines the credit-risk premium on infrastructure projects in the country-risk environment of developing countries. They also provide tentative quantitative evidence of the importance of macroeconomic and project-specific attributes of project risk. Their key finding is that the market seems to impose a high-risk premium on loans to countries with high inflation and to projects in the road sector.

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Paper provided by The World Bank in its series Policy Research Working Paper Series with number 1861.

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Date of creation: 31 Dec 1997
Date of revision:
Handle: RePEc:wbk:wbrwps:1861
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