The Effects of Country Risk and Conflict on Infrastructure PPPs
Through an empirical analysis of the relationship between private participation in infrastructure and country risk, the paper shows that country risk ratings are a reliable predictor of infrastructure investment levels in developing countries. The...
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| Format: | Policy Research Working Paper |
| Language: | English en_US |
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World Bank, Washington, DC
2013
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| Online Access: | http://documents.worldbank.org/curated/en/2013/08/18108361/effects-country-risk-conflict-infrastructure-ppps http://hdl.handle.net/10986/16002 |
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okr-10986-16002 |
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oai_dc |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English en_US |
| topic |
ACCESS TO BANK ACCESS TO CAPITAL ACCESS TO CAPITAL MARKETS AFFILIATED ORGANIZATIONS AIRPORTS ASSET SALES ASSURANCE AUCTIONS BANK POLICY BUS CAPITAL ASSETS CAPITAL MARKETS COUNTRY RISK COUNTRY RISKS CREDIT ENHANCEMENTS CREDIT RATINGS CREDIT WORTHINESS CURRENCY CURRENCY DEPRECIATION DEBT RESTRUCTURING DEVELOPING COUNTRIES DEVELOPING COUNTRY DISBURSEMENT DISBURSEMENTS DIVIDENDS ECONOMIC PERFORMANCE ECONOMIC RISKS ECONOMICS EXCHANGE RATE EXPOSURE EXPROPRIATION FIXED EFFECT MODEL FOREIGN DIRECT INVESTMENT FOREIGN DIRECT INVESTMENTS FOREIGN INVESTMENT FOREIGN INVESTORS GLOBALIZATION GROSS DOMESTIC PRODUCT GROWTH RATE HIGHWAYS INCOME INFLATION INFLATION RISKS INFRASTRUCTURE DEVELOPMENT INFRASTRUCTURE INVESTMENT INFRASTRUCTURE INVESTMENTS INFRASTRUCTURE PROJECTS INTERNATIONAL BANK INVESTING INVESTMENT BY SECTOR INVESTMENT COMMITMENTS INVESTMENT OPPORTUNITY INVESTMENT POLICIES INVESTMENT REQUIREMENTS LEVEL OF COMMITMENT LEVEL OF COMMITMENTS LONG-TERM INVESTMENTS MACROECONOMIC VARIABLES MARKET INTEREST MARKET SIZE MONETARY INSTABILITY NATIONAL DEBT NONPAYMENT OFFERINGS OPERATIONAL EFFICIENCIES POLITICAL ECONOMY POLITICAL RISK POLITICAL RISK INSURANCE POLITICAL STABILITY PRICE ELASTICITY PRICE ELASTICITY OF DEMAND PRIVATE CAPITAL PRIVATE EQUITY PRIVATE FINANCING PRIVATE INFRASTRUCTURE PRIVATE INVESTMENT PRIVATE INVESTMENTS PRIVATE INVESTORS PRIVATIZATIONS PROFIT MARGINS PUBLIC INVESTMENT PUBLIC INVESTMENTS PUBLIC POLICIES PUBLIC POLICY PUBLIC UTILITY PUBLIC-PRIVATE PARTNERSHIP PUBLIC-PRIVATE PARTNERSHIPS QUANTITATIVE ANALYSIS RAIL RAILROADS RAPID TRANSIT RAPID TRANSIT SYSTEMS RATES OF RETURN RENEGOTIATIONS RETURNS RISK INSURANCE RISK PROFILES ROAD ROADS RULE OF LAW SANITATION SHORT-TERM FINANCE SOCIAL DEVELOPMENT SOVEREIGN RISK SUSTAINABLE DEVELOPMENT TELECOMMUNICATIONS TOLL TOLL ROADS TRADE BALANCE TRAFFIC TRANSPORT TRANSPORT SECTOR URBAN DEVELOPMENT WORLD DEVELOPMENT INDICATORS |
| spellingShingle |
ACCESS TO BANK ACCESS TO CAPITAL ACCESS TO CAPITAL MARKETS AFFILIATED ORGANIZATIONS AIRPORTS ASSET SALES ASSURANCE AUCTIONS BANK POLICY BUS CAPITAL ASSETS CAPITAL MARKETS COUNTRY RISK COUNTRY RISKS CREDIT ENHANCEMENTS CREDIT RATINGS CREDIT WORTHINESS CURRENCY CURRENCY DEPRECIATION DEBT RESTRUCTURING DEVELOPING COUNTRIES DEVELOPING COUNTRY DISBURSEMENT DISBURSEMENTS DIVIDENDS ECONOMIC PERFORMANCE ECONOMIC RISKS ECONOMICS EXCHANGE RATE EXPOSURE EXPROPRIATION FIXED EFFECT MODEL FOREIGN DIRECT INVESTMENT FOREIGN DIRECT INVESTMENTS FOREIGN INVESTMENT FOREIGN INVESTORS GLOBALIZATION GROSS DOMESTIC PRODUCT GROWTH RATE HIGHWAYS INCOME INFLATION INFLATION RISKS INFRASTRUCTURE DEVELOPMENT INFRASTRUCTURE INVESTMENT INFRASTRUCTURE INVESTMENTS INFRASTRUCTURE PROJECTS INTERNATIONAL BANK INVESTING INVESTMENT BY SECTOR INVESTMENT COMMITMENTS INVESTMENT OPPORTUNITY INVESTMENT POLICIES INVESTMENT REQUIREMENTS LEVEL OF COMMITMENT LEVEL OF COMMITMENTS LONG-TERM INVESTMENTS MACROECONOMIC VARIABLES MARKET INTEREST MARKET SIZE MONETARY INSTABILITY NATIONAL DEBT NONPAYMENT OFFERINGS OPERATIONAL EFFICIENCIES POLITICAL ECONOMY POLITICAL RISK POLITICAL RISK INSURANCE POLITICAL STABILITY PRICE ELASTICITY PRICE ELASTICITY OF DEMAND PRIVATE CAPITAL PRIVATE EQUITY PRIVATE FINANCING PRIVATE INFRASTRUCTURE PRIVATE INVESTMENT PRIVATE INVESTMENTS PRIVATE INVESTORS PRIVATIZATIONS PROFIT MARGINS PUBLIC INVESTMENT PUBLIC INVESTMENTS PUBLIC POLICIES PUBLIC POLICY PUBLIC UTILITY PUBLIC-PRIVATE PARTNERSHIP PUBLIC-PRIVATE PARTNERSHIPS QUANTITATIVE ANALYSIS RAIL RAILROADS RAPID TRANSIT RAPID TRANSIT SYSTEMS RATES OF RETURN RENEGOTIATIONS RETURNS RISK INSURANCE RISK PROFILES ROAD ROADS RULE OF LAW SANITATION SHORT-TERM FINANCE SOCIAL DEVELOPMENT SOVEREIGN RISK SUSTAINABLE DEVELOPMENT TELECOMMUNICATIONS TOLL TOLL ROADS TRADE BALANCE TRAFFIC TRANSPORT TRANSPORT SECTOR URBAN DEVELOPMENT WORLD DEVELOPMENT INDICATORS Araya, Gonzalo Schwartz, Jordan Andres, Luis The Effects of Country Risk and Conflict on Infrastructure PPPs |
| relation |
Policy Research Working Paper;No. 6569 |
| description |
Through an empirical analysis of the
relationship between private participation in infrastructure
and country risk, the paper shows that country risk ratings
are a reliable predictor of infrastructure investment levels
in developing countries. The results suggest that a
difference of one standard deviation in a country's
sovereign risk score is associated with a 27 percent
increase in the probability of having a private
participation in infrastructure commitment, and a 41 percent
higher level of investment in dollar terms. The predictive
ability of country risk ratings exists for all sectors of
infrastructure and for both greenfield and concessions. On
average, energy investments exhibit a higher sensitivity to
country risk than transport, telecommunications, and water
investments. Concessions are more sensitive than greenfield
investments to country risk, although country risk is a good
predictor of investment levels for both contractual forms.
Although foreign direct investment is found to be sensitive
to country risk, the causal relationship is not nearly as
sensitive as it is with private participation in
infrastructure. Finally, an analysis of private
participation in infrastructure patterns for those countries
emerging from conflict reveals that conflict-affected
countries typically require six to seven years to attract
significant levels or forms of private investments in
infrastructure from the day that the conflict is officially
resolved. Private investments in sectors where assets are
more difficult to secure--such as water, power distribution,
or roads--are slower to appear or simply never materialize. |
| format |
Publications & Research :: Policy Research Working Paper |
| author |
Araya, Gonzalo Schwartz, Jordan Andres, Luis |
| author_facet |
Araya, Gonzalo Schwartz, Jordan Andres, Luis |
| author_sort |
Araya, Gonzalo |
| title |
The Effects of Country Risk and Conflict on Infrastructure PPPs |
| title_short |
The Effects of Country Risk and Conflict on Infrastructure PPPs |
| title_full |
The Effects of Country Risk and Conflict on Infrastructure PPPs |
| title_fullStr |
The Effects of Country Risk and Conflict on Infrastructure PPPs |
| title_full_unstemmed |
The Effects of Country Risk and Conflict on Infrastructure PPPs |
| title_sort |
effects of country risk and conflict on infrastructure ppps |
| publisher |
World Bank, Washington, DC |
| publishDate |
2013 |
| url |
http://documents.worldbank.org/curated/en/2013/08/18108361/effects-country-risk-conflict-infrastructure-ppps http://hdl.handle.net/10986/16002 |
| _version_ |
1764431993212239872 |
| spelling |
okr-10986-160022021-04-23T14:03:27Z The Effects of Country Risk and Conflict on Infrastructure PPPs Araya, Gonzalo Schwartz, Jordan Andres, Luis ACCESS TO BANK ACCESS TO CAPITAL ACCESS TO CAPITAL MARKETS AFFILIATED ORGANIZATIONS AIRPORTS ASSET SALES ASSURANCE AUCTIONS BANK POLICY BUS CAPITAL ASSETS CAPITAL MARKETS COUNTRY RISK COUNTRY RISKS CREDIT ENHANCEMENTS CREDIT RATINGS CREDIT WORTHINESS CURRENCY CURRENCY DEPRECIATION DEBT RESTRUCTURING DEVELOPING COUNTRIES DEVELOPING COUNTRY DISBURSEMENT DISBURSEMENTS DIVIDENDS ECONOMIC PERFORMANCE ECONOMIC RISKS ECONOMICS EXCHANGE RATE EXPOSURE EXPROPRIATION FIXED EFFECT MODEL FOREIGN DIRECT INVESTMENT FOREIGN DIRECT INVESTMENTS FOREIGN INVESTMENT FOREIGN INVESTORS GLOBALIZATION GROSS DOMESTIC PRODUCT GROWTH RATE HIGHWAYS INCOME INFLATION INFLATION RISKS INFRASTRUCTURE DEVELOPMENT INFRASTRUCTURE INVESTMENT INFRASTRUCTURE INVESTMENTS INFRASTRUCTURE PROJECTS INTERNATIONAL BANK INVESTING INVESTMENT BY SECTOR INVESTMENT COMMITMENTS INVESTMENT OPPORTUNITY INVESTMENT POLICIES INVESTMENT REQUIREMENTS LEVEL OF COMMITMENT LEVEL OF COMMITMENTS LONG-TERM INVESTMENTS MACROECONOMIC VARIABLES MARKET INTEREST MARKET SIZE MONETARY INSTABILITY NATIONAL DEBT NONPAYMENT OFFERINGS OPERATIONAL EFFICIENCIES POLITICAL ECONOMY POLITICAL RISK POLITICAL RISK INSURANCE POLITICAL STABILITY PRICE ELASTICITY PRICE ELASTICITY OF DEMAND PRIVATE CAPITAL PRIVATE EQUITY PRIVATE FINANCING PRIVATE INFRASTRUCTURE PRIVATE INVESTMENT PRIVATE INVESTMENTS PRIVATE INVESTORS PRIVATIZATIONS PROFIT MARGINS PUBLIC INVESTMENT PUBLIC INVESTMENTS PUBLIC POLICIES PUBLIC POLICY PUBLIC UTILITY PUBLIC-PRIVATE PARTNERSHIP PUBLIC-PRIVATE PARTNERSHIPS QUANTITATIVE ANALYSIS RAIL RAILROADS RAPID TRANSIT RAPID TRANSIT SYSTEMS RATES OF RETURN RENEGOTIATIONS RETURNS RISK INSURANCE RISK PROFILES ROAD ROADS RULE OF LAW SANITATION SHORT-TERM FINANCE SOCIAL DEVELOPMENT SOVEREIGN RISK SUSTAINABLE DEVELOPMENT TELECOMMUNICATIONS TOLL TOLL ROADS TRADE BALANCE TRAFFIC TRANSPORT TRANSPORT SECTOR URBAN DEVELOPMENT WORLD DEVELOPMENT INDICATORS Through an empirical analysis of the relationship between private participation in infrastructure and country risk, the paper shows that country risk ratings are a reliable predictor of infrastructure investment levels in developing countries. The results suggest that a difference of one standard deviation in a country's sovereign risk score is associated with a 27 percent increase in the probability of having a private participation in infrastructure commitment, and a 41 percent higher level of investment in dollar terms. The predictive ability of country risk ratings exists for all sectors of infrastructure and for both greenfield and concessions. On average, energy investments exhibit a higher sensitivity to country risk than transport, telecommunications, and water investments. Concessions are more sensitive than greenfield investments to country risk, although country risk is a good predictor of investment levels for both contractual forms. Although foreign direct investment is found to be sensitive to country risk, the causal relationship is not nearly as sensitive as it is with private participation in infrastructure. Finally, an analysis of private participation in infrastructure patterns for those countries emerging from conflict reveals that conflict-affected countries typically require six to seven years to attract significant levels or forms of private investments in infrastructure from the day that the conflict is officially resolved. Private investments in sectors where assets are more difficult to secure--such as water, power distribution, or roads--are slower to appear or simply never materialize. 2013-10-01T21:19:51Z 2013-10-01T21:19:51Z 2013-08 http://documents.worldbank.org/curated/en/2013/08/18108361/effects-country-risk-conflict-infrastructure-ppps http://hdl.handle.net/10986/16002 English en_US Policy Research Working Paper;No. 6569 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research |