Economic Effects of Infrastructure Investment from the Land-based Financing
By Vladimir Yakunin, Daisuke Kotegawa, Pablo Ava, Teresita Cruz-del Rosario, Dimitris Psarrakis, Anna-Maria Chkoniya, Maxim Vilisov, Li Xin, and Jose Barbero
The challenges of the modern world, such as urbanization, 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 may reach $97 trillion US dollars (Oxford Economics, 2017). To solve this problem, the active participation of private companies is proposed through the framework of public-private partnership. In July 2016, G20/OECD Task Force on Institutional Investors and Long-term Financing provided the supporting note to the Guidance Note on Diversified Financial Instruments, Infrastructure to the G20 Finance Ministers and Central Banks Governors and the G20 leaders. Land-based financing was indicated among innovative financial approaches; its mechanism uses land jointly with financial/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.