Vol 4, No 1 (Published)

Table of Contents

Open Access
Article
Article ID: 1124
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by Alfredo Marvao Pereira, Rui Manuel Pereira
J. Infras. Policy. Dev. 2020 , 4(1);    753 Views
Abstract Using a newly-developed data set for Portugal, we analyze the industry-level effects of infrastructure investment. Focusing on the divide between traded and non-traded industries, we find that infrastructure investments have a non-traded bias, as these shift the industry mix towards private and public services. We also find that the industries that benefit the most in relative terms are all non-traded: construction, trade, and real estate, among the private services, and education and health, among the public services. Similarly, emerging trading sectors, such as hospitality and professional services, stand to gain. The positive impacts on traded industries are too small to make a difference. These results highlight that infrastructure-based strategies are not neutral in terms of the industry mix. Moreover, with most of the benefits accruing to non-traded industries, such a development model that is heavily based on domestic demand may be unsustainable in light of Portugal’s current foreign account position. 
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Open Access
Article
Article ID: 1180
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by Alex He
J. Infras. Policy. Dev. 2020 , 4(1);    3060 Views
Abstract The paper examines the motivations, financing, expansion and challenges of the Belt and Road Initiative (BRI). The BRI was initially designed to address China’s overcapacity and promote economic growth in both China and in countries along the “Belt” and “Road” through infrastructure investment and industrial capacity cooperation. It took into account China’s strategic transition in its opening-up policy and foreign policy to pay more attention to the neighboring countries in Southeast Asia and Central and West Asia when facing greater strategic pressure from the United States in East Asia and the Pacific region. More themes have been added to the initiative’s original framework since its inception in 2013, including the vision of the BRI as China’s major solution to improve international economic cooperation and practice to build a “community of shared future for mankind”, and the idea of the Green Silk Road and the Digital Silk Road. Chinese state-owned enterprises and policy and commercial banks have dominated investment and financing for BRI projects, which explains the root of the problems and risks facing the initiative, such as unsustainable debt, non-transparency, corruption and low economic efficiency. Measures taken by China to tackle these problems, for example, mitigating the debt distress and improving debt sustainability, are unlikely to make a big difference anytime soon due to the tenacity of China’s long-held state-driven investment model.
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Open Access
Article
Article ID: 1175
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by Jyoti Bisbey, Seyed Hossein Hosseini Nourzad, Ching-Yuan Chu, Maryam Ouhadi
J. Infras. Policy. Dev. 2020 , 4(1);    2363 Views
Abstract While there has been much discussion about the large infrastructure needs in Asia and the Pacific, less attention has been paid to public expenditure efficiency in infrastructure services delivery. New constructions are not the only solution, especially when governments have limited capital to invest. Globally, new infrastructure projects face delays and cost overruns, leading to an inefficient use of public resources. The root causes include the lack of transparency in project selection, the lack of project preparation, the silo approach by public entities in assessing feasibility studies, and the lack of public sector capacity to fully develop a bankable pipeline of projects. To tackle these issues, governments need a smarter investment approach and to do so, enhancing public service efficiency is very crucial. The paper suggests a “whole life cycle” (WLC) approach as the main strategic solution for the discussed issues and challenges. We expand the definition of WLC to include the entire life cycle of the infrastructure asset from need identification to its disposal. The stages comprise planning, preparation, procurement, design, construction, operation and maintenance, and disposal. This is because we believe any efficient or inefficient decision throughout such a wide life cycle influences the quality of public services. Hence, in this holistic approach, infrastructure life cycle consists of four phases: planning, preparation, procurement, and implementation. Governments could enhance public efficiency and thus improve access to finance throughout the WLC by several solutions. These are (i) preparing infrastructure master plan and pipelines and long-term budgeting during the planning phase; (ii) establishing framework and guidelines and improving governance during preparation phase; (iii) promoting standardization, transparency, open government, and contractual consistency during the procurement phase; and finally (iv) continued role of government and total asset management during the implementation phase. In addition to these phase-specific means, key WLC solutions include proper use of technology, capacity building, and private participation in general and public-private partnership (PPP) in particular.
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Open Access
Article
Article ID: 1165
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by Minsoo Lee, Xuehui Han, Pilipinas F. Quising, Mai Lin Villaruel
J. Infras. Policy. Dev. 2020 , 4(1);    720 Views
Abstract Developing Asia’s infrastructure gap results from both inadequate public resources and a lack of effective channels to mobilize private resources toward desired outcomes. The public-private partnership (PPP) mechanism has evolved to fill the infrastructure gap. However, PPP projects are often at risk of becoming distressed, or worst, being terminated because of the long-term nature of contracts and the many different stakeholders involved. This paper applies survival-time hazard analysis to estimate how project-related, macroeconomic, and institutional factors affect the hazard rate of the projects. Empirical results show that government’s provision of guarantees, involvement of multilateral development banks, and existence of a dedicated PPP unit are important for a project’s success. Privately initiated proposals should be regulated and undergo competitive bidding to reduce the hazard rate of the project and the corresponding burden to the government. Economic growth leads to successful project outcomes. Improved legal and institutional environment can ensure PPP success.
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Open Access
Article
Article ID: 1167
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by Rabah Arezki
J. Infras. Policy. Dev. 2020 , 4(1);    821 Views
Abstract This paper argues for a novel approach to financing infrastructure needs in Arab countries. It first describes the context of rising public debt in the region, contrasting it with the vast infrastructure needs. It then discusses the challenges in meeting these needs with traditional financing. The paper then makes the case for maximizing finance for development by using public-private partnerships and presents a few successful examples in Arab countries. Finally, the paper explores the way forward and concludes on the need for strong state capacity and integrity to promote the “maximizing finance for development” approach.
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Open Access
Article
Article ID: 1168
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by Shubhomoy Ray, Jyoti Bisbey
J. Infras. Policy. Dev. 2020 , 4(1);    2262 Views
Abstract The project finance scenario has changed significantly around the world after the 2008 financial crisis and following the subsequent Basel III recommendations. Project finance loans from commercial banks and financial institutions have largely dried up, leaving it mostly to the export credit agencies and the bilateral and multilateral development banks to provide the institutional credit. Unfortunately, those sources are not enough, given the huge needs for construction of new infrastructure and renovation of the old ones across Asia, Africa and Latin America. The need for capital markets, through market listed financial products across asset class, unlocking a large part of domestic and corporate savings, has never been felt as strongly before. This article seeks to analyze the development story of various Asian capital markets and examine financial products, which have succeeded in their short history in receiving investor interest. The article also delves into the challenges to market development, policy imperatives and the issues relating to market liquidity and credit rating, which are the most significant influencers for public market float and investor interest.
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Open Access
Case Report
Article ID: 1166
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by Heljar Havnes
J. Infras. Policy. Dev. 2020 , 4(1);    2261 Views
Abstract The People's Republic of China (PRC) wants to become a key regional actor in the Arctic. PRC's underlying priority in the region is gaining access to commercial opportunities from trade and natural resources. To this end, PRC is building its domestic capacities for research and commercial development in the Arctic, increasing its involvement in multilateral forums on Arctic governance and deepening ties to Arctic nations, especially Russia. Attitudes towards PRC among Arctic nations are diverging, but Beijing generally faces high levels of skepticism and opposition to its Arctic involvement, explicitly grounded in perceptions of PRC as a state undermining the rules-based international order and potential military build-up in the high north. The analytical framework in this article builds on an outline authored by Exner-Pirot in 2012 (Exner-Pirot, 2012) to detail the current schools of thought within Arctic governance, and builds on it by including more recent developments in Arctic governance, incorporating the updated Arctic policies of most Arctic countries and connecting it to PRC. This article contends that Beijing wants to change the status quo of Arctic governance and shift it towards a more accommodating approach to non-Arctic states. This article finds, based on the stated Arctic strategies of the eight Arctic states and PRC, that there are different views on Arctic governance where Arctic countries for the most part indicate an openness to a Chinese entry into the Arctic, albeit in diverging ways. This creates a complex governance scenario for PRC to navigate as it seeks to become a key Arctic player
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Open Access
Review
Article ID: 1181
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by Qingyang Gu
J. Infras. Policy. Dev. 2020 , 4(1);    808 Views
Abstract In this policy insight, the author lays out the context of the BRI and its role in global development. He also explains why the US should consider working with China on the BRI. The author opines on China’s possible approach and strategy to get global private investors to come on board for the massive BRI projects. He suggests that the global players can establish a third-party market cooperation and coordination mechanism to turn the BRI into a platform for win-win global collaboration.
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