News

27.04.2018

[eNews] Finance Research Covered by Forbes and the World Bank

Forbes magazine and the World Bank covered research conducted by the Finance Department’s Prof Abhiroop Mukherjee and PhD student S. Lakshmi Naaraayanan (co-authored with Prof Sumit Agarwal from NUS) on the efficiency with which private financiers respond to new roads.

Investments in public infrastructure such as improved roads are a key component of economic growth strategy for emerging economies, and especially important in the context of China’s trillion dollar Belt and Road initiative.

Policy-makers think that such roads will allow farmers to shift to cash crops, move goods produced in villages to marketplaces, and allow villagers to find work in cities more easily. But utilizing such new productive opportunities created by the improved connectivity requires financing. Policymakers assume that once roads are built, financing will follow, allowing these rural communities to benefit from the new roads. But this is far from clear –will private profit-motivated financiers indeed pick up the resultant lending opportunities? Or will governments also need to provide financing to facilitate these trickle-down benefits? Moreover, even if financing does follow infrastructure improvements, who will it benefit – the rich or the poor?  These are the key questions that the study examines.


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