Growth, inflation and public investment in less developed countries.

摘要

Infrastructure investment has been responsible for the improved growth performance in many developing countries over the past few years, and has the potential to contribute more. Regrettably, most countries have difficulties financing large-scale investment. This dissertation proposes specific financing schemes for infrastructure investment in less developed countries.;Chapter One focuses on low-income country group, and assesses the macroeconomic effects of foreign direct investment in infrastructure through public-private partnerships. Foreign private capital inflows not only resolve the funding problems that governments encounter, but also preserve the positive effects of infrastructure investment on growth and price stability.;In contrast to low-income countries, middle-income emerging-market economies, in general, have more financing options available. A typical example is China. Chapter Two proposes a novel financing scheme, reserve financing, for public infrastructure development in China. Spending part of the nation's huge international reserves to pay for higher investment stimulates domestic demand, reducing the country's dependence on exports. But reserve financing is not applicable for most countries.;Chapter Three then considers various other financing options. A temporary deficit-share rule stands out as the best financing scheme. With a certain fraction of investment costs paid off through bond sales, the temporary fiscal gains are sufficient to pay for the higher spending, so that the economy enjoys continuously lower inflation and higher growth.