Financing the development of physical infrastructure in a timely and proper fashion in developing countries has always been on top of the development agenda, given the severe resource constraints in these countries. Theoretically there exist several financing instruments and sources, including fiscal resources mobilized through tax revenues, issuance of equities and bonds, and international and domestic short-term borrowing (e.g., from commercial banks). Each method involves varying degrees of advantages as well as risks.
The Asian financial crisis has underscored the need for both public and private sectors to diversify sources of funds to finance development projects. The domestic capital market is a fertile source that has not been successfully utilized for development financing, especially prior to the crisis. In particular, domestic bond markets are one of the instruments that could help put potential resources to more productive use, and are even a viable alternative source of financing for development projects.
Intergovernmental transfers are an important tool of public sector finance in both industrialized and developing countries.
This volume outlines a framework for considering intergovernmental transfers based on accepted principles and international practices. Individual chapters critically examine selected major transfer programs in five Asian countries: Cambodia, India, Indonesia, Pakistan, and Philippines.
This paper calls for sound local government finance. Municipal credit markets need to be developed in order for local governments to mobilize private savings for long-term infrastructure projects and deliver public services.
The three guiding principles in opening financial services are (i) resource mobilization for economic recovery and sustained development, (ii) financial stability, and (iii) market competition.
This briefing note discusses the feasibilty of creating mortgage-backed securities (MBSs) markets in eight developing member countries (DMCs).
Given its fragile balance of payments position and urgent need to boost industrial production, Pakistan needs to significantly increase its mobilization of foreign resources. However, long-term official assistance will become increasingly scarce, while promoting large portfolio investments is not a proper policy option due to Pakistan's underdeveloped and narrow capital market. Significant increases in commercial borrowings are also not desirable. It is therefore crucial to accord high priority to foreign direct investment (FDI).
It is widely agreed that Korea's rapid economic development since the early 1960s resulted from the rapid expansion in exports and that the Korean government has been heavily involved in this process. There is, however, disagreement over the role of the government in the economic development, particularly in relation to the market forces. Some studies regard the Korean growth model as a neoclassical model that stands upon a free-market and free-trade system, but others not.
The monetarist/structuralist debate on the relationship between economic growth and stabilization in price and the balance of payments has existed since the 1950s. Monetarists argue that though it may not be the balance of payments has existed since the 1950s. Monetarists argue that though it may not be a sufficient condition, price stabilization is a prerequisite for promoting economic growth and protecting the balance of payments. Structuralists contend that in developing countries, economic growth inevitably brings inflation and deterioration in the balance of payments.