Development Finance Research Articles

China’s hidden role in malaria control and elimination in Africa

BackgroundInsufficient funding is hindering the achievement of malaria elimination targets in Africa, despite the pressing need for increased investment in malaria control. While Western donors attribute their inaction to financial...

Government and Business Funding of Sources of Funds for R&D at Universities: Complements or Substitutes?

Abstract The paper examines the relationship between different sources of funding for research and development at universities. Following the European Commission methodology, we distinguished between government, business and abroad financing of research and development (R&D) in the higher education sector. The paper aims to test short-run and long-run relationships between different funding sources. We are focused on the relationship between government and business funding of R&D at universities. Based on panel data for EU countries, we applied the Granger causality tests and General methods of moments to examine short-run causality and cointegrating regression to search for potential long-run relationships. Our results suggest that government funding of R&D act as a complement to business funding. Hence, rising government financial support for research in higher education can, lead to higher funding from the business sector. Founding from abroad seems to have a similar effect on business funding in the long run.

Sustainable Prioritization of Public Asphalt Paved Road Maintenance

The development of transportation infrastructure is crucial for a country's progress as it enables access to social and economic amenities and acts as a vital link between production and consumption. This is particularly significant for landlocked nations like Zambia, which heavily rely on a wide network of public highways, including both paved and unsurfaced roads. Regardless of their quality and construction, all road surfaces degrade over time due to the combined effects of traffic load and environmental factors. If not properly managed, this can lead to costly repairs and rehabilitation efforts. Government organizations face a dilemma when deciding which public roads to prioritize for maintenance. This follows that the inherent hurdle is competing needs within limited finances for infrastructure development. However, the challenge of road maintenance prioritization can be addressed by adopting a multi-criteria approach. This study aims to address the issue of sustainability and provides insights into which public roads should be given priority for maintenance. The research proposes a comprehensive set of criteria focusing on sustainability and assigns relative importance to them, with emphasis on state of deterioration, emergency function, climate resilience, environment, strategic importance, social considerations, economic factors, and political importance. It suggests that road maintenance decision-making should prioritize sustainability, resilience, and societal well-being, challenging traditional assumptions.

Increasing the supply of health products in underserved regions

We study mechanisms that encourage manufacturers of health products to build production and distribution capacity. This is important for low‐ and middle‐income country (LMIC) markets where ability to pay is lower and demand risks are greater. Development finance institutions and philanthropies are beginning to utilize new instruments to incentivize manufacturers to build production/distribution capacity for LMIC markets. The goal of this paper is to understand the effectiveness of such mechanisms in different settings. We examine four instruments: (1) subsidy proportional to unit sales (sales subsidy), (2) subsidy proportional to unit capacity (variable‐capacity subsidy), (3) subsidy proportional to total capacity investment (total‐capacity subsidy), and (4) a minimum volume guarantee. We analyze incentivized capacity as a function of the social‐investor budget for each instrument. We show how our framework can be used to identify a social investor's preferred instrument given relevant parameter estimates, and we provide insight into the type of settings where a particular instrument dominates. A sales subsidy dominates when ability to pay is very low; a total‐capacity subsidy dominates when ability to pay is low. Outside of these settings, instrument preference is nuanced, though a sales subsidy is dominated by at least one other instrument. When ability to pay is moderate, a variable‐capacity subsidy tends to be preferred under high variable‐capacity cost and high budget, a volume guarantee tends to be preferred under low variable‐capacity cost and high budget, and a total‐capacity subsidy tends to be preferred under low budget.

Sustainable development finance

Sustainable development finance

The role of regulation in the relationship between financial development and inclusive finance in Sub-Saharan Africa

The role of regulation in the relationship between financial development and inclusive finance in Sub-Saharan Africa

Can carbon finance promote high quality economic development: evidence from China

Utilizing provincial panel data from China spanning 2000 to 2020, this study constructed an indicator system for high-quality economic development by incorporating 35 indicators. These indicators stem from five domains: innovative, coordinated, green, open, and shared development. To assess carbon finance development, an evaluation system was created using twelve basic indicators derived from three categories: financial environment, energy efficiency, and scientific and technological progression. The entropy weight method facilitated the computation of indices such as the economic quality development, innovative development, coordinated development, green development, open development, shared development, and carbon finance development indices. Both static and dynamic panel models served to empirically ascertain the specific influence of carbon finance on high-quality economic development. Additionally, regional and temporal variances in carbon finance's impact on high-quality economic development were scrutinized. Findings indicate that provinces like Beijing, Shanghai, Jiangsu, and Guangdong, known for advanced economic development, exhibit elevated levels of high-quality economic and carbon finance development. Nonetheless, disparities among provinces are evident. While carbon finance significantly bolsters China's high-quality economic growth, its influence is not uniformly observed across all five development domains. It primarily augments coordinated, green, and shared development. Furthermore, the role of carbon finance in boosting China's high-quality economic development exhibits regional and temporal variations. The promotion of high-quality economic growth can be achieved by fostering an amenable carbon finance environment, addressing aging, maximizing governmental influence, enhancing transportation infrastructure, propelling new urbanization, and refining education standards.

Cofinancing and infrastructure project outcomes in Chinese lending and overseas development finance

Cofinancing from government agencies, development banks, and private actors is acknowledged as an important tool to bridge the infrastructure finance gap in developing countries, but relatively little is known about outcomes for cofinanced projects. To fill this void, we explore the role of cofinancing in shaping Chinese lending and overseas development finance for infrastructure projects in terms of implementation outcomes and environmental performance. We examine a sample of 2997 infrastructure projects committed between 2000 and 2017 that were funded by Chinese finance, among which 15 percent are cofinanced. Our study shows that cofinancing correlates with higher infrastructure project completion rates, as cofinanced projects are 3.3–7.1 percentage points less likely to be cancelled or suspended than non-cofinanced ones. We also find that cofinancing with certain partners suggests specific benefits. Cofinancing with partners from the recipient country is associated with more localized implementation, whereas cofinancing with international partners has demonstrated improved environmental performance, with a 2.7 percent lower carbon dioxide emissions intensity and a 0.42 standard deviation decrease in biodiversity risks. The results suggest that cofinancing could be an effective tool to enhance infrastructure project success and achieve greater sustainable performance in Chinese lending and overseas development finance.

Development banks and state-led investments: new research questions

ABSTRACT The aim of the article is to bring in the concept of governance and financial bureaucracies into the discussion on financing of innovation and development. The article refers to national development banks as the example of state-backed investors who make investment decisions in line with policy priorities (to prioritized sectors, technologies and development projects). While building on the examples of public development banks, the article seeks to conceptualize the governance of public strategic investments through the notion of a state-led ‘investment function’. In doing so, the article seeks complementarity of the concepts that derive from economics and innovation literature on one hand and public policy and governance literature on the other hand. This study suggests that the governance of state-led investments can be understood as a combination of financial policies, institutions and organizational routines that translate into capacities of respective public bureaucratic structures to make financing decisions.

Resilience and spillover effects on bank financing for the private sector development in sub-Saharan Africa

Resilience and spillover effects on bank financing for the private sector development in sub-Saharan Africa

Europe’s Global Gateway: A New Instrument of Geopolitics

In December 2021, the EU member states agreed on the Global Gateway strategy to mobilize public and private funds of up to €300 billion between 2021 and 2027, to invest in digital, climate and energy, transport, health, education, and research fields. With a geographical focus on Africa, Global Gateway links infrastructure investment projects with condition principles—including democratic values, good governance, and transparency—and catalyzes private investment into EU development financing. Against this backdrop, this study explores why EU member states agreed on this new geopolitical instrument. This piece posits that the confluence of three factors enabled the creation of Global Gateway. First, the EU established this new instrument to counter China’s role as a global infrastructure lender in Africa. Second, Global Gateway was possible through the shift to private investment in multilateral development financing. Equally important for the establishment of Global Gateway was the European Commission’s transformational leadership as an entrepreneurial agent in designing this geopolitical strategy of the EU’s power projection. The conclusion outlines future research avenues and enables readers to consider the wider prospects and caveats of the Global Gateway strategy.

Corporate Tax Saving Strategy and Share Price Performance

This study ascertained how corporate tax saving strategy affect share price performance. It examined how debt tax shield, non-debt tax shield, and effective tax rate affect share price performance. The secondary source of data collection was adopted in the study where the purposive sampling technique was used to select a sample size of twelve (12) listed industrial goods firms in Nigeria. Ordinary Least Square regression analysis was used in this study and the findings revealed that non-debt tax shield has significant effect on share price performance of listed industrial goods firms in Nigeria and that effective tax rate has significant effect on share price performance of listed industrial goods firms in Nigeria. The study concluded that crucial component of fiscal policy that has a great impact on both the social and economic development of a nation, hence, tax savings demands attention from managers at all levels of management. The study recommended that Nigerian government needs subsidize cost of debt-financing for the companies operating in the country’s capital market and that stakeholders should develop the financial markets and make it accessible for firms to obtain long-term financing for economic growth and development.

Digital economy, green technology innovation, and productivity improvement of energy enterprises.

This study aims to address the important question of whether the digital economy can be deeply integrated with the energy sector to break through the resource and environmental constraints and thus enhance the productivity of energy companies. Using a sample of Chinese energy-listed companies, we comprehensively investigate the impact of the digital economy on the productivity of energy firms using the OLS method, mediated effects model, instrumental variables method, and difference-in-differences model. Research shows that the development of digital economy can significantly improve the productivity of energy enterprises. This effect is more obvious in eastern cities, non-resource-based cities, state-owned enterprises, and enterprises with high cash holdings. Green technological innovation in alternative energy production, transportation, and administrative supervision and design is an important channel for improving productivity in the digital economy. Internet development and digital inclusive finance can also improve the productivity of energy enterprises. "National Big Data Pilot Zone" and "Broadband China" pilot cities can play a policy role in improving the productivity of energy enterprises. The findings provide important insights for promoting the integration of the digital revolution with the energy technology revolution and accelerating the green development and digital transformation of the energy sector.

Heterogeneity in financing for development strategies as a hindering factor to achieve a global agreement on the 2030 Agenda

The adoption of the 2030 Agenda has favoured a profound shift in the development aid system with the consolidation of new actors, goals and instruments. While the Sustainable Development Goals are a sound proposal to address the development problems in this new scenario, there is no agreement on many other topics, such as the most accurate instruments to finance the Agenda. Despite consensus on concerns about the effectiveness of official development assistance (ODA), no alternative proposals have yet been consolidated, and debate persists on how to finance the Agenda. However, the literature does not sufficiently address the fact that countries are pursuing divergent financing strategies that complicate the necessary consensus, especially after the negative impact of COVID-19 on international co-operation. To contribute to filling this gap in the literature, we focus on donor countries, scrutinising the variety of financing for development (FfD) strategies they support through their public policies, either promoting ODA flows, remittances, philanthropic donations or a policy coherence for development approach. Although there is still no international agreement on the role that these four instruments should play in financing the 2030 Agenda, data evidence shows how donor countries rely more on one or another of such instruments. Our hypotheses are that it is possible to find similar strategic patterns throughout different groups of countries and that there are significant differences in the FfD strategy implemented by each group. To test them, we propose a hierarchical cluster analysis to classify main donor countries according to the different FfD strategies they are actually carrying out. The analysis confirms our hypotheses, identifying four groups of countries according to their FfD strategy. Countries in each group share similar strategic approaches to financing the fight against poverty, while groups deeply diverge from one another. These results could explain the delay in addressing the unavoidable FfD debate in the 2030 Agenda, and they even question whether a common and shared FfD approach would be feasible if not appropriately addressed.

Analisis Ketimpangan Penguasaan dan Pemilikan Tanah Pasca Reforma Agraria di Indonesia

Reforming agrarian law will only be successful if agrarian law prioritizes farmers as the main pillar of national economic development, without ignoring the interests of investors and large investors as a source of development financing. In following up on the policy of reforming Agrarian law as regulated in the UUPA, the government has issued a decree as outlined in MPR Decree Number: IX/MPR/2001 concerning Agrarian Reform and Natural Resource Management. To overcome problems that will later hinder the implementation of agrarian law reform in Indonesia, Pancasila and the 1945 Constitution must be used as the ideal basis and constitutional basis for every legal act carried out by the State, meaning that regulations or policies issued in the context of implementing agrarian law reform must be based on on Pancasila and the 1945 Constitution. Agrarian conflict is still a legal problem in Indonesia. The presence of a strategy in the form of agrarian reform is expected to be able to make a real contribution in realizing social justice and people's prosperity for all Indonesian people. The implementation of agrarian reform is characterized by comprehensive asset management and access management, so it is important to carry out a comprehensive evaluation with fairness and community empowerment. The results obtained from this research show that the organizers of agrarian reform are expected to be able to guarantee increased community welfare and realize social justice, whether through the efforts of the Agrarian Reform Task Force (GTRA) or the Government which carries out a compromise strategy with ministries/institutions to ensure land rights through agrarian reform.

Forecasting China-Africa economic integration using Wavelet-ARIMA hybrid approach

China-Africa economic integration generally looks lucid, as evidenced by rising bilateral trade, as well as Chinese FDI, aid, and debt financing for infrastructure development in Africa. The engagement, however, appears to be strategically channeled to benefit China’s resource endowment strategy. First, Chinese FDI in Africa is primarily resource-seeking, with minimum manufacturing value addition. Second, China has successfully replicated the Angola model in other resource-rich African countries, and most infrastructure loans-for-natural resources barter deals are said to be undervalued. There is also a resource-backed loan arrangement in place, in which default Chinese loans are repaid in natural resources. Third, while China claims that its financial aid is critical to Africa’s growth and development processes, a significant portion of the aid is spent on non-development projects such as building parliaments and government buildings. This lend credence to the notion that China uses aid to gain diplomatic recognition from African leaders, with resource-rich and/or institutionally unstable countries being the most targeted. The preceding arguments support why Africa’s exports to China dominate other China’s financial flows to Africa, and consist mainly of natural resources. Accordingly, this study aims to forecast China-Africa economic integration through the lens of China’s demand for natural resources and Africa’s demand for capital, both of which are reflected in Africa’s exports to China. The study used a MODWT-ARIMA hybrid forecasting technique to account for the short period of available China-Africa bilateral trade dataset (1992–2021), and found that Africa’s exports to China are likely to decline from US$ 119.20 billion in 2022 to US$ 13.68 billion in 2026 on average. This finding coincides with a period in which Chinese demand for Africa’s natural resources is expected to decline.

Can financing technological development programs mitigate mineral resource consumption-related environmental problems faced by Sub-Saharan African nations?

Much like the Global South, countries located in the Sub-Saharan African region have plentiful deposits of critical minerals. However, mineral dependency in these countries is assumed to be inflicting detrimental impacts on their environmental conditions. Hence, this study tests this assumption by utilizing data from 30 developing nations from this mineral-rich region. Specifically, the environmental influences associated with mineral consumption, technological development financing, financial globalization, and urbanization are explored. Based on the analytical outcomes, derived using robust panel data analytical methods, it is certified that mineral resource dependence is responsible for triggering carbon emission-led environmental problems. Besides, disbursement of technological development funds is found to directly improve environmental conditions while indirectly limiting the environmental distresses exerted by the mineral industries located across Sub-Saharan Africa. Moreover, validating the pollution haven hypothesis, the findings endorse the environmental condition-degrading impact of foreign direct investment flowing into the concerned nations. Lastly, urbanization is found to be responsible for raising environmental concerns by boosting the carbon emission figures further. Thus, it is recommended that the governments of the selected Sub-Saharan African nations make their mineral industries more ecologically friendly, provide ample financial support for technological development programs, attract clean foreign direct investment, and implement environmentally-sustainable urbanization policies.

POUR UNE JUSTICE COMMUTATIVE DANS LES PLANS NATIONAUX DE DEVELOPPEMENT

After the period of structural adjustment, whichhad no positive impact on development or national finances, we are now in the era of National Development Plans. At the risk of these national plans telescoping and scuttlingeachother, giventhat countries in the same zone produce the samethings and have the samenaturalresources, wewould like to use ourwork to propose an inclusive regional plan in the light of the commutative justice advocated by Thomas Aquinas and Aristotle. This regionaldevelopment plan willtakeintoaccount not only the specificity of each country, but also the region as a whole, so as not to give in to the manipulations of the usualdivide-and-rulecommonalities. Wewill focus on three main areas. These are the ecological question, economic and political inclusion, and the security question. This plan must bedrawn up in the light of commutative justice, a justice thatfocuses on the distribution of goodsaccording to equivalence, where nature obeys the order of chance. In fact, the distribution of wealth, births and social affiliations from the outsetis the result of chance, and it can neverbe right thatwhat nature gives for free shouldbekept for oneself. A regional plan for inclusive developmentwouldbe the place to repairwhat nature has disposed of at random.

Can Donors Encourage Authoritarian States to Go Green? Evidence From Vietnamese‒German Development Cooperation

Recent debates about “green” authoritarianism have focused on the institutional features of state-led coercive environmentalism. However, the role of various non-state actors in the greening of authoritarian states has remained largely unexplored. Carrying out a case study of Vietnamese‒German development cooperation in the environmental and climate spheres, this article examines the interaction between Vietnamese state institutions and international donors. The article argues that donors play an important role in greening the state policy agenda in Vietnam by funding environmental projects and facilitating knowledge sharing. Nonetheless, donors have very limited freedom to push the political process beyond policymaking and foster meaningful policy implementation. Development practitioners in Vietnam often find themselves caught in a policymaking vacuum, where policymaking is a never-ending process and implementation remains limited. These findings raise broader questions about the effectiveness of climate-related development finance for environmental governance under authoritarian regimes.

Understanding the role of green finance and renewable energy consumption for sustainable development in ACI economies

Understanding the role of green finance and renewable energy consumption for sustainable development in ACI economies