![]() Perhaps GH’s results are too pessimistic because future investments will be better chosen than in the past. GH look at roads and electricity, and there is evidence these are complements, meaning social returns are much higher when the two are well coordinated. Would national incomes be catapulted to the levels needed to cover the costs, or would everyone involved be bankrupted? One would need to have faith in “big push” development theories, in which complementarities across different investments result in a return that is much greater than the sum of the parts, to believe in a happy ending. There is not much sign that high levels of public investment tend to result in long-run productivity improvements, and short run booms are sometimes followed by slumps.Īs an exercise in speculative fiction, it’s interesting to ask what would happen if these wish lists of investment were to actually materialise. Their paper begins with a sobering reminder that historical episodes of high investment in public capital are widely thought to be partially responsible for previous debt crises. The social returns that GH estimate amounts to asking how well things turned out, on average, in the past. Just because you calculate that giving children a good education would require 1000 new schools does not tell you what will happen if you build 1000 schools. The social return on transportation infrastructure depends on what it ends up transporting. Why wouldn’t investments needed to achieve the SDGs have high social returns? Because the social return on investing in schools depends on whether you have enough well-trained teachers, and whether the economy provides jobs that make good use of well-educated people. ![]() Looking at investment in roads and electricity, the authors find only 7 of 53 developing countries in which the social returns to public investment clear both hurdles. The authors compare the estimated social return on public infrastructure investment against two hurdle rates – one domestic and one international. In a forthcoming paper Peter Blair Henry and Camille Gardner (GH) propose a superior approach to wish lists for sizing investment requirements, based on trying to estimate the sum of investment where the benefits look like exceeding the costs. It is not even obvious that an enormous increase in the pace of investment would be a good idea. Africa might need huge investment in renewable energy, for instance, but there is not a great deal happening on the ground. If asset managers turned up with trillions to invest, they would not necessarily find anywhere to put it. They are wish lists - estimates of the amount of investment it would take to produce everything that the SDGs need, compared to the level of investment that is actually happening. These numbers motivate the current policy fixation on using blended finance to mobilise private capital and turn billions into trillions.īut these are not financing gaps, in the sense of an unmet demand for finance. Trillions of dollars of investment are needed for the Sustainable Development Goals. I’m looking to invest in developing countriesĭevelopment finance rhetoric is built on the need to fill yawning financing gaps.For further information please refer to the Gap Fund FAQ sheet.Financing gap? What financing gap? - British International Investment Projects are proposed using the Gap Fund’s expression of interest form and submitted online. ![]() ![]() The level of support will vary based on specific project’s needs. Social and environmental co-benefits are also taken into account. Additionally, projects must be situated in an urban area or functionally linked to one. Projects submitted by cities and local authorities in OECD-DAC countries are evaluated on their climate mitigation or adaptation potential. The Gap Fund provides a range of technical assistance and capacity building to support climate-smart urban planning and urban climate action strategies, helping to build a pipeline of high-quality, climate-smart urban investments, with a focus on early, often underfunded stages of project identification and preparation. The City Climate Finance Gap Fund (Gap Fund) helps cities in developing and emerging countries realize their climate ambitions, turning low-carbon, climate-resilient ideas into strategies and finance-ready projects. ![]()
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