Institutional Investment in Infrastructure in Developing Countries : Introduction to Potential Models

The link between infrastructure and economic growth is widely acknowledged -- as is the infrastructure gap, which can act as a break on growth in emerging markets and developing economies (EMDEs). Since the global economic and financial crisis, the challenges of raising financing for infrastructure projects in EMDEs are also well known. The challenges come from stretched government finances and restrictions on global bank lending. Hence much attention has been focused on the potential for institutional investors as a growing potential source of financing. This paper argues that infrastructure projects can potentially deliver long-term returns, but investments, particularly in EMDEs need to be carefully structured to meet the needs of both sides. The paper first considers the existing types of institutional investors and their potential for filling the infrastructure financing gap. The challenges of adjusting asset allocations, particularly toward EMDE infrastructure, are discussed and examples of projects where institutional investors have been involved are given. Finally, the paper considers a range of models for the involvement of institutional investors in EMDEs and makes initial proposals for how to determine which model fits best in a particular country context.

Bibliographic Details

Main Authors:	Inderst, Georg, Stewart, Fiona
Language:	English en_US
Published:	World Bank, Washington, DC 2014-02
Subjects:	ADVANCED ECONOMIES, ASSET CLASS, ASSET CLASSES, ASSET MANAGERS, BANK ASSETS, BANK LENDING, BANK POLICY, BEST MARKET, BOND INSURANCE, BOND RATINGS, BONDS, BORROWING COSTS, CAPACITY BUILDING, CAPITAL INVESTMENT, CAPITAL MARKET, CAPITAL MARKET ACTIVITY, CAPITAL MARKET DEVELOPMENT, CAPITAL STOCK, CASH FLOW, CASH FLOWS, COMMERCIAL BANKS, COMMERCIAL FUNDING, CONFLICTS OF INTEREST, CORPORATE BOND, CORPORATE BOND INVESTMENTS, CORPORATE BONDS, COUPON, CREDIT ENHANCEMENT, CREDIT GUARANTEES, CREDIT RATING, CREDIT RATINGS, CREDITOR, DEBT, DEMOGRAPHIC, DEVELOPING COUNTRIES, DEVELOPING COUNTRY, DEVELOPING ECONOMIES, DEVELOPMENT BANK, DIRECT INVESTMENT, DOMESTIC CAPITAL, DOMESTIC CAPITAL MARKETS, DOMESTIC ECONOMIES, DOMESTIC INSTITUTIONAL INVESTORS, DOMESTIC MARKETS, DUE DILIGENCE, ECONOMIC CRISIS, EMERGING MARKET, EMERGING MARKET ECONOMIES, EMERGING MARKETS, ENABLING ENVIRONMENT, EQUITIES, EQUITY FUND, EQUITY FUNDS, EQUITY HOLDINGS, EQUITY INVESTMENTS, EXPROPRIATION, EXPROPRIATION RISKS, FINANCE CORPORATION, FINANCIAL COMPANIES, FINANCIAL CRISIS, FINANCIAL INSTITUTIONS, FINANCIAL INSTRUMENTS, FINANCIAL MARKETS, FINANCIAL SECTOR, FLOW OF CAPITAL, FOREIGN EXCHANGE, FOREIGN EXCHANGE RISK, FOREIGN INVESTORS, FUND MANAGERS, GLOBAL CAPITAL, GLOBAL CAPITAL MARKETS, GLOBAL PENSIONS, GOVERNMENT BONDS, GOVERNMENT EXPENDITURES, GOVERNMENT FINANCES, GOVERNMENT POLICY, GRACE PERIODS, ILLIQUIDITY, INCOME, INCOME STREAMS, INFLATION, INFRASTRUCTURE BOND, INFRASTRUCTURE BONDS, INFRASTRUCTURE DEVELOPMENT, INFRASTRUCTURE FINANCE, INFRASTRUCTURE FINANCING, INFRASTRUCTURE INVESTMENT, INFRASTRUCTURE INVESTMENTS, INFRASTRUCTURE PROJECT, INFRASTRUCTURE PROJECTS, INSTITUTIONAL INFRASTRUCTURE, INSTITUTIONAL INVESTMENT, INSTITUTIONAL INVESTOR, INSTITUTIONAL INVESTORS, INSURANCE, INSURANCE COMPANIES, INSURANCE COMPANY, INSURANCE PENETRATION, INSURANCE PRODUCTS, INSURER, INSURERS, INTEREST RATE, INTEREST RATES, INTERNATIONAL BANK, INTERNATIONAL BEST PRACTICES, INTERNATIONAL COMPETITION, INTERNATIONAL FINANCE, INTERNATIONAL FINANCIAL MARKETS, INTERNATIONAL INSTITUTIONAL INVESTORS, INTERNATIONAL INVESTORS, INVESTING, INVESTMENT APPROACHES, INVESTMENT BARRIERS, INVESTMENT CAPITAL, INVESTMENT FINANCING, INVESTMENT GOVERNANCE, INVESTMENT OPPORTUNITIES, INVESTMENT POLICIES, INVESTMENT REGULATIONS, INVESTMENT RISK, INVESTMENT VEHICLE, INVESTMENT VEHICLES, INVESTMENT VOLUMES, INVESTOR BASE, IPO, ISSUANCE, LEGAL MECHANISM, LIQUID ASSETS, LIQUIDITY, LOCAL INVESTORS, LOCAL MARKETS, LONG TERM BOND, LONG-TERM CAPITAL, LONG-TERM FINANCE, LONG-TERM INVESTMENT, MARKET CAP, MARKET FAILURES, MARKET INFRASTRUCTURE, MARKET PRACTICE, MARKET RETURNS, MATURITIES, MONETARY POLICY, MULTILATERAL DEVELOPMENT, MUNICIPAL BONDS, MUTUAL FUNDS, NATURAL RESOURCE, PARTIAL CREDIT, PARTIAL CREDIT GUARANTEES, PARTIAL RISK, PARTICULAR COUNTRY, PENSION, PENSION ASSETS, PENSION FUND, PENSION FUND INVESTMENT, PENSION FUNDS, PENSION SYSTEM, PENSION SYSTEMS, PENSIONS, POLITICAL ECONOMY, POLITICAL RISKS, POOLS OF CAPITAL, PORTFOLIO, PORTFOLIO EXPOSURE, PORTFOLIO GROWTH, PORTFOLIOS, POTENTIAL INVESTMENT, POTENTIAL INVESTMENTS, PRIVATE CAPITAL, PRIVATE CREDIT, PRIVATE EQUITY, PRIVATE FINANCE, PRIVATE FINANCING, PRIVATE INFRASTRUCTURE, PRIVATE SECTOR DEVELOPMENT, PRIVATE SECTOR FINANCE, PRIVATE SECTOR INVESTORS, PRIVATIZATION, PUBLIC BANK, PUBLIC INVESTMENT, RAPID GROWTH, REGIONAL BOND MARKET, REGULATORY CONSTRAINTS, REGULATORY ENVIRONMENT, REGULATORY RESTRICTIONS, REGULATORY STANDARDS, REGULATORY SYSTEMS, RENEWABLE ENERGY, RESERVE, RESERVE FUNDS, RETURN, RETURNS, RISK PREMIUM, RISK-FREE INVESTMENTS, SAVINGS, SMALL BUSINESSES, SMALL COUNTRIES, SOCIAL DEVELOPMENT, SOVEREIGN BONDS, SOVEREIGN RISK, STOCK EXCHANGES, STOCK MARKET, STOCKS, TECHNICAL ASSISTANCE, TERMS OF CREDIT, TRADITIONAL INVESTMENT, TRUST FUNDS,
Online Access:	http://documents.worldbank.org/curated/en/2014/02/18983758/institutional-investment-infrastructure-developing-countries-introduction-potential-models https://hdl.handle.net/10986/18358
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