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Project finance as a driver of economic growth in low‐income countries

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  • Stefanie Kleimeier
  • Roald Versteeg

Abstract

This study investigates the role of project finance as a driver of economic growth. We hypothesize that project finance is beneficial to the least developed economies as it is able to compensate for a lack of domestic financial development. The contractual structure unique to project finance leads to better investment management and governance. Investigating 90 countries from 1991 to 2005, we find support for our hypothesis. Results show that project finance fosters economic growth and that its effect is strongest in low‐income countries, where financial development and governance is weakest.

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  • Stefanie Kleimeier & Roald Versteeg, 2010. "Project finance as a driver of economic growth in low‐income countries," Review of Financial Economics, John Wiley & Sons, vol. 19(2), pages 49-59, April.
    • Handle: RePEc:wly:revfec:v:19:y:2010:i:2:p:49-59
    DOI: 10.1016/j.rfe.2010.01.002
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    2. Juan David González-Ruiz & Sergio Botero-Botero & Eduardo Duque-Grisales, 2018. "Financial Eco-Innovation as a Mechanism for Fostering the Development of Sustainable Infrastructure Systems," Sustainability, MDPI, vol. 10(12), pages 1-19, November.
    3. Lisbeth F. la Cour & Jennifer Müller, 2014. "Growth and project finance in the least developed countries," International Journal of Business and Economic Sciences Applied Research (IJBESAR), Democritus University of Thrace (DUTH), Kavala Campus, Greece, vol. 7(2), pages 77-103, September.
    4. Subramanian, Krishnamurthy V. & Tung, Frederick, 2016. "Law and Project Finance," Journal of Financial Intermediation, Elsevier, vol. 25(C), pages 154-177.
    5. Sebastian Eisenbach & Dirk Schiereck & Julian Trillig & Paschen von Flotow, 2014. "Sustainable Project Finance, the Adoption of the Equator Principles and Shareholder Value Effects," Business Strategy and the Environment, Wiley Blackwell, vol. 23(6), pages 375-394, September.
    6. William L. Megginson, 2010. "Introduction to the special issue on project finance," Review of Financial Economics, John Wiley & Sons, vol. 19(2), pages 47-48, April.
    7. Jakob Müllner, 2017. "International project finance: review and implications for international finance and international business," Management Review Quarterly, Springer, vol. 67(2), pages 97-133, April.
    8. Jacob Dut Chol Riak, 2024. "Financing of Renewable and Fossils Related Projects: A Critical Appraisal of Subsidies and Risks in South Sudan," International Journal of Science and Business, IJSAB International, vol. 42(1), pages 84-101.
    9. Marco Percoco, 2012. "Infrastructure Investment and Growth in Developing Countries: Does the Type of Contract Matter?," Journal of Infrastructure Development, India Development Foundation, vol. 4(2), pages 139-152, December.
    10. Megginson, William L., 2010. "Introduction to the special issue on project finance," Review of Financial Economics, Elsevier, vol. 19(2), pages 47-48, April.

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