Financing of construction investment in developing countries through capital markets

Construction projects (especially infrastructure) require high capital investments, both during construction and operation, and account for between 3 and 8 % of a developing country's GDP. On average, half of the investments in the economy are in construction and supporting economic activities. In developing countries, the construction sector must be included in national development plans in order to promote a sound building market by developing the whole national economy gradually, taking into account the interrelationships with other branches of the economy. Infrastructure is one of the fastest growing sectors in the world in terms of private participation and financing. The unavailability of debt remains a significant constraint in many private infrastructure projects. Many developing countries have had less access to capital markets, due to a global decline in lending, increased uncertainty among investors, and reduced willingness to assume risk. The question then is "What needs to be done to get more FDI to developing countries"? In developing countries, there is plenty of room for positive growth and access to new pools of capital. However, these countries need to first develop the legal, financial, and technological infrastructure to reap those benefits. International capital market integration will continue to give developing countries improved access to private foreign capital. Policymakers must tailor their policies to suit investor's interest in order to access the international capital markets and obtain the necessary financing for their PPI (Private Participation in Infrastructure) projects. Private Participation in infrastructure is here to stay, and as more developing countries are opening up to private financiers, the policy debate has changed from "whether to" to "how to". The objective of this thesis is to arrive at a strategy that developing countries can follow in order to Finance Construction Investment, especially in infrastructure, through better and more efficient access of domestic and international Capital Markets.

Department dc:contributor.department

Massachusetts Institute of Technology. Dept. of Civil and Environmental Engineering.

Grantor dc:publisher

Massachusetts Institute of Technology

Year dc:date.issued

2003

Author dc:creator

• Kafati Geadah, Andrés Nicolas, 1979-

Advisor dc:contributor.advisor

• Fred Moavenzadeh.

• Civil and Environmental Engineering.

Statement dc:rights

• M.I.T. theses are protected by copyright. They may be viewed from this source for any purpose, but reproduction or distribution in any format is prohibited without written permission. See provided URL for inquiries about permission.

Licence dc:rights.uri

• http://dspace.mit.edu/handle/1721.1/7582

Language dc:language.iso

eng

Handle dc:identifier.uri

http://hdl.handle.net/1721.1/29574

OAI identifier oai:identifier

oai:dspace.mit.edu:1721.1/29574