Enhancing Financial Connectivity Between Asia and Europe: Implications for Infrastructure Convergence Between the Two Regions^*

This paper explores the methods and policies that could enhance the financial connectivity between Europe and Asia in infrastructure investments. We argue that if Asian governments agree to enter into a long-term repayment commitment with a share of spillover tax revenues of public infrastructure projects under a regulatory framework, it could attract European long-term institutional funds in Asia's infrastructure projects. This approach will reduce divergence in infrastructure between the two regions and encourage regional connectivity. With some empirical evidence, this paper highlights the operational risks and methods of sharing spillover revenue for infrastructure projects.