The Infrastructure Finance Challenge E-Book

Ingo Walter (ed.)

• Herausgeber: Open Book Publishers
• Kategorie: Fachliteratur
• Sprache: Englisch

Veröffentlichungsjahr: 2016

Beschreibung

Infrastructure and its effects on economic growth, social welfare, and sustainability receive a great deal of attention today. There is widespread agreement that infrastructure is a key dimension of global development and that its impact reaches deep into the broader economy with important and multifaceted implications for social progress.At the same time, infrastructure finance is among the most complex and challenging areas in the global financial architecture. Ingo Walter, Professor Emeritus of Finance, Corporate Governance and Ethics at the Stern School of Business, New York University, and his team of experts tackle the issue by focussing on key findings backed by serious theoretical and empirical research. The result is a set of viable guideposts for researchers, policy-makers, students and anybody interested in the varied challenges of the contemporary economy.

Leseprobe

THE INFRASTRUCTURE FINANCE CHALLENGE

The Infrastructure Finance Challenge

A Report by the Working Group on Infrastructure Finance, Stern School of Business, New York University

chaired by Professor Ingo Walter

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© 2016 New York University/Stern School of Business

This work is licensed under a Creative Commons Attribution 4.0 International license (CC BY 4.0). This license allows you to share, copy, distribute and transmit the text; to adapt the text and to make commercial use of the text providing attribution is made to the authors (but not in any way that suggests that they endorses you or your use of the work). Attribution should include the following information:

Ingo Walter (ed.), The Infrastructure Finance Challenge. Cambridge, UK: Open Book Publishers, 2016. http://dx.doi.org/10.11647/OBP.0106

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Updated digital material and resources associated with this volume are available at https://www.openbookpublishers.com/isbn/9781783742936#resources

This is the third volume of our Open Reports Series.

ISSN (print): 2399-6668

ISSN (digital): 2399-6676

ISBN Paperback: 978-1-78374-293-6

ISBN Hardback: 978-1-78374-294-3

ISBN Digital (PDF): 978-1-78374-295-0

ISBN Digital ebook (epub): 978-1-78374-296-7

ISBN Digital ebook (mobi): 978-1-78374-297-4

DOI: 10.11647/OBP.0106

Cover image: Chi King, ‘Glass and Steel (HONG KONG/ARCHITECTURE) IX’ (2006), CC BY 2.0. Image from Wikimedia, https://commons.wikimedia.org/wiki/File:Glass_and_Steel_(HONG_KONG-ARCHITECTURE)_IX_(1426664677).jpg

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Printed in the United Kingdom, United States and Australia by Lightning Source for Open Book Publishers (Cambridge, UK).

Contents

Preface

Paul Boghossian

1

Executive Summary

3

Some Key Conclusions

5

1.

Infrastructure, Performance and Economic Growth

7

2.

Investable Infrastructure Assets

15

3.

Infrastructure Attributes and Problems of Market Failure

21

4.

Legal Structures and Frameworks

31

5.

Beyond Economics: Governance and Infrastructure Development

39

6.

The Global Infrastructure Development Sector

47

7.

Infrastructure Finance

53

8.

Structuring the Financial Mosaic

59

9.

Identification and Mitigation of Project-related Risks

61

10.

Intermediating Infrastructure Finance: Market Contours

67

11.

Establishing Robust Markets for Infrastructure-backed Securities

75

12.

Infrastructure Equity as an Asset Class

81

13.

Project and Infrastructure Debt as an Asset Class

87

14.

Portfolio Optimization: Institutional Investors and Asset Managers

93

15.

Accelerating Infrastructure Finance

95

16.

Some Solutions

107

References

113

Contributors

117

Preface

The New York University Global Institute for Advanced Study is very pleased to support this important work on global infrastructure finance, led by Prof Ingo Walter of NYU’s Stern School of Business.

The global interconnectedness of the world’s economies, along with the torrid pace of urbanization in the developing world, lead to urgent and manifestly complex issues about infrastructure. This monograph takes on some of the fundamental questions in this area, attempting to clarify how to think about the boundaries of what is meant by ‘infrastructure’, its pricing, its potential adverse effects and its financing.

This monograph represents the first stage in what we expect to be a multi-year, multi-disciplinary exploration of these questions, so crucial to the future well-being of the developing world and, by extension, to that of the rest of the globe.

Initial work on the project includes participation in infrastructure financing panels discussions in the US, Europe and Asia, as well as a case study on the capital-market financing of a major Latin American urban highway project. Several additional case studies are underway which will lead to a case series available for use in university infrastructure courses around the world. A graduate-level infrastructure finance course at NYU Stern is being designed for launch in the fall of 2017. Research activity is focused on assembly of infrastructure financing datasets as well as an initial policy paper on infrastructure banks and their implications for the US. A steering committee will identify and launch additional research projects.

I am grateful to Prof Walter for his hard work on this project and to Dean Peter Henry for bringing the project to the attention of the GIAS.

Paul Boghossian Director, Global Institute for Advanced Study Julius Silver Professor of Philosophy NYU

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Executive Summary

© New York University/Stern School of Business, CC BY 4.0 http://dx.doi.org/10.11647/OBP.0106.17

Infrastructure and its effects on economic growth, social welfare, and sustainability receive a great deal of attention today. There is widespread agreement that infrastructure is a key dimension of global development and that its impact reaches deep into the broader economy, with important and complex implications for social progress.

There is equally broad agreement that infrastructure’s dynamics are often hard to gauge. The external costs and benefits of infrastructure projects often differ materially from their internal costs and benefits. There are usually winners and losers, so in the political arena debates on infrastructure tend to be amplified. Consequently, infrastructure is a rich field for the kind of inquiry needed to craft sensible business strategies and public policies. They begin with the basics:

Just what is “infrastructure”, and where do its boundaries lie? How should infrastructure services be priced when they generate significant public goods whose benefits are hard to allocate? How should adverse effects of infrastructure projects be incorporated into their cost structures, to be passed forward to end-users and backward to investors? On the spectrum between private and public ownership, where should individual infrastructure projects fall? What is the appropriate role for public-private partnerships, purpose-specific infrastructure authorities, and build-operate-transfer models?What kinds of regulatory arrangements covering infrastructure projects are appropriate given widely differing political and economic circumstances?How should infrastructure development be financed, either on or off the public accounts of governments or private-sector sponsors? Where in the global pool of investable financial assets can infrastructure debt and equity best be placed?

This study focuses on the last of these issues — infrastructure finance. The scale of infrastructure investment needed in both developed and developing countries parallels the need for investable assets to create efficient portfolios in pension funds and other long-term managed asset pools. So a sustainable global equilibrium based on returns, costs, and risks can generate dramatic shared gains.

Some Key Conclusions

© New York University/Stern School of Business, CC BY 4.0 http://dx.doi.org/10.11647/OBP.0106.18

Infrastructure finance is among the most complex and challenging areas in the global financial architecture, and so the problem of assembling a set of sensible guideposts for it is equally formidable. We begin with a dozen findings backed by serious theoretical and empirical research:

Infrastructure development matters in the context of economic performance and growth.Infrastructure tends to generate significant positive spillovers, and is therefore hard to price.