Sungbae An, Korea Institute for International Economic Policy: Although there are high infrastructure needs in Asian emerging economies, mostly in South and Southeast Asia, only limited financing sources from government are available due to fiscal sustainability. Private participation is also limited since projects are usually unattractive because of the low rate of return and operational risks. On the contrary, European long-term institutional funds are seeking investment opportunities that generate a stable and relatively high rate of return. The work by Yoshino, Hossain, and Taghizadeh-Hesary suggests a sharing scheme of spillover revenue from infrastructure investment to attract private participation and argues that the proposed scheme would enhance the financial connectivity between Europe and developing Asia.
The spillover revenue refers to the increased tax revenue as a result of enhanced infrastructure, and the government could commit to share a fixed portion of this extra revenue with private participants. This paper proposes as...