Chapter 9. Economic Effects of Infrastructure Investment from Land-based Financing

P. 85–92.

Chkoniya A., Yakunin V., Kotegawa D., Ava P., Cruz-del Rosario T., Psarrakis D., Vilisov M., Xin L., Barbero J.

The challenges of the modern world, such as urbanization, and the urgent need to increase access to infrastructure are forcing many countries to look for new solutions to support economic growth and a sustainable development agenda. Meanwhile, there is the problem of the infrastructure investment gap, when state development institutions are in dire need of money to implement the long-term infrastructure projects. According to the Global Infrastructure Outlook, the demand across 50 countries and seven sectors to 2040 for investment resources could reach $97 trillion (Oxford Economics 2017). To solve this problem, the active participation of private companies is proposed through the framework of public–private partnerships. In July 2016, the Group of 20 (G20)/Organisation for Economic Co-operation and Development Task Force on Institutional Investors and Long-term Financing provided a supporting note to the Guidance Note on Diversification of Financial Instruments for Infrastructure and SMEs to the G20 Finance Ministers and Central Bank Governors and the G20 leaders. Land-based financing was indicated among innovative financial approaches; its mechanism uses land jointly with financial and/or tax instruments (such as tax increment financing), so that infrastructure investment spurs growth in the economic sector as a whole. At the same time, there are a number of challenges when applying this tool that should be resolved for practical successful implementation.

Keywords: infrastructure, infrastructure investments, land-based financing

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Building the Future of Quality Infrastructure

Asian Development Bank Institute, 2020.