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Emerging Markets

Declining private investment in infrastructure – a trend or an outlier?

Clive Harris's picture



We’ve just released the 2016 update for the World Bank’s Private Participation in Infrastructure (PPI) Database and it makes for some gloomy reading. Investment commitments (investments) in infrastructure with private participation in Emerging Markets and Developing Economies (EMDEs) fell by a whopping 37% compared to 2015. 

Foreign exchange risk: How a liquidity facility could help

Joaquim Levy's picture

© Yang Aijun/World Bank

In a guest post for Infrastructure Investor, World Bank Group CFO Joaquim Levy says multilaterals’ provision of hard-currency liquidity facilities could do much to catalyze private investment into emerging market infrastructure.

The World Bank Group is playing a leading role in thinking through better approaches to infrastructure financing in emerging markets and developing economies (EMDEs). Part of this work entails understanding the key barriers that might impede private capital from participating more actively in EMDE projects. This is why we focus so much on developing local capital markets and other means to unlock the power of local institutional investors. It is also why we’ve been working to facilitate cross-border investment, in a time when returns in advanced economies remain low.

Follow the money: How to cut through infrastructure’s worst red tape

David Nason's picture


(Photo: Getty Images)

There is a huge need for new and upgraded infrastructure around the world, particularly in emerging markets. Policy makers like to talk about raising trillions of dollars to fund infrastructure, but the truth is that capital for good projects exists. Regulation and lack of policy clarity are inhibitors.
 
What lacks is a strong pipeline of projects that meet societal needs and are financeable. If we can increase the quality of projects, and encourage smart and efficient regulations, the money to fund them will follow.
 
As an investor and infrastructure technology provider in 180 markets, GE surveyed its global investment, sales and policy teams for their insights on what is holding up progress.
 
We identified several areas that should be prioritized by the international community and local governments.

Should emerging markets worry about U.S. monetary policy announcements?

Poonam Gupta's picture

Emerging economies are routinely affected by monetary policy announcements in the US. This was starkly evident on May 22, 2013, when Federal Reserve Chairman Ben Bernanke first spoke of the possibility of the Fed tapering its security purchases. This “tapering talk” had a sharp negative impact on financial conditions in emerging markets in ensuing days—their exchange rates depreciated, bond spreads increased, and equity prices fell; so much so that some of the countries seemed on the verge of a full-fledged balance of payments crisis. The event helps explain why issues related to the spillover of US monetary policy have gained prominence in recent contributions to the literature and in policy discussions (Rajan, 2015).

Rising debt and deficits in Emerging Market and Developing Economies (EMDEs) in 5 charts

Ayhan Kose's picture
Debt and budget deficits have risen among emerging market and developing economies since the 2007-2009 financial crisis, rendering these economies more vulnerable to a sharp rise in borrowing costs. Government debt has climbed to 47 percent of GDP in 2016 from 35 percent of GDP in 2007 among emerging market and developing economies, while fiscal deficits have widened to about 5 percent of GDP from roughly 1 percent of GDP over the same period.

Connecting pension funds with emerging market infrastructure

Joaquim Levy's picture

It might sound improbable to hear a CFO say this, but I consider one of my roles since joining the World Bank Group to be that of matchmaker. Let me explain.

As I have noted in other blogs over recent months, the world’s emerging market and developing economies—EMDEs for short—face an enormous gap in infrastructure investment. Certainly it is not the only big financing challenge that countries face as they work to reduce poverty and extend prosperity to more of their citizens. But infrastructure underpins many aspects of economic growth, getting people to jobs and schools, connecting goods to markets, reducing the isolation of the poorest areas in many countries.  And by some estimates, the sector’s funding gap is as high as a trillion dollars. 

Are capital flows fickle? And does the answer still depend on type?

Poonam Gupta's picture

According to conventional wisdom, capital flows are fickle. They are fickle more or less independent of time and place. But different flows exhibit different degrees of volatility: FDI is least volatile, while bank-intermediated flows are most volatile.  Other portfolio capital flows rank in between, and within this intermediate category debt flows are more volatile than equity-based flows. 

Media (R)evolutions: What’s the future of the sharing economy?

Darejani Markozashvili's picture
New developments and curiosities from a changing global media landscape: People, Spaces, Deliberation brings trends and events to your attention that illustrate that tomorrow's media environment will look very different from today's, and will have little resemblance to yesterday's.

Globally, more and more people are embracing the sharing or platform economy. Some estimate that the sector’s revenues will increase to $335 billion globally by 2025. According to the Future Jobs Survey, conducted by the World Economic Forum, among top technological drivers of industrial change by 2020, the sharing economy, crowdsourcing takes the fifth place, with mobile internet, cloud technology taking the lead.
 


So what will the impact of these drivers be on the industries? Will there be new industries born as a result of these transformations? If so, will we be able and ready to respond to those changes? Will we have necessary skill sets to compete in the work force? Future holds both opportunities and challenges for industries, corporations, governments, and others concerned with the technological advancements.
 
What exactly is the sharing economy? Are you using some of its platforms? Do you benefit from their services? 

Predicting success for infrastructure in emerging markets: Moving from art to science

Jyoti Bisbey's picture

with research contributions from Zichao Wei

At conferences, in meetings, and even during casual work conversations, I am asked the same two questions:  “Which countries are ideal for investments in infrastructure?  Where should the investors invest and what new opportunities should they look toward?” 

While sitting in the World Bank gives us a bird’s-eye view of emerging markets and developing economies (EMDEs), it doesn’t offer the up-close-and-personal perspective that investors demand in order to answer these questions in a succinct way.  Not that there’s any shortage of synoptic responses. Any number of “market gurus” can assess projects in a second, gathering all the low hanging fruits which are out there in EMDEs.  If there is a private deal to be made, then the deal is already done.

SMEs finance leapfrogs through fintech innovations

Gloria M. Grandolini's picture



Since more than 50% of small and medium-sized businesses (SMEs) worldwide lack adequate access to credit, the international community is proposing reforms that will help countries strengthen their financial infrastructure and make it easier for SMEs to borrow funds needed to operate and expand.


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