COVID-19 has amplified existing imbalances, institutional and financing constraints associated with a development strategy that did not take sufficient account of challenges with emissions, environmental damage and health risks associated with climate change in a number of countries, including China. The recovery from the pandemic can be combined with appropriately designed investments that take into account human, social, natural and physical capital, as well as distributional objectives, that can also address commitments under the Paris agreement. An important criterion for sustainable development is that the tax regimes at the national and sub-national levels should reflect the same criteria as the investment strategy. Own-source revenues, are essential to be able to access private financing, including local government bonds and PPPs in a sustainable manner. Governance criteria are also important including information on the buildup of liabilities at all levels of government, to ensure transparent governance.
Despite differences in political systems, the Chinese experiences are relevant in a wide range of emerging market countries as the measures utilize institutions and policies reflecting international best practices, including modern tax administrations for the VAT, and income taxes, and benefit-linked property taxes, as well as utilization of balance sheets information consistent with the IMF’s Government Financial Statistics Manual, 2014. The options have significant implications for policy advice and development cooperation for meeting global climate change goals while ensuring sustainable employment generation with transparency and accountability.

Against the backdrop of anti-globalization rhetoric, this paper summarizes our joint book entitled Going Beyond Aid (Lin and Wang, 2017a) and discusses the prospects for development finance in the broad context of Belt and Road Initiative (BRI). Based on the New Structural Economics (Lin, 2010; 2011), here we focus on China’s demonstrated comparative advantages in infrastructure, e.g. in hydropower and high-speed railways (HSR). In addition, long-term orientation (LTO) and patient capital are latent comparative advantages that many Asian economies possess, and are critical for the Belt and Road Initiative. Only if these comparative advantages are utilized can these economies cooperate to potentially achieve win-win.

Starting from the ‘90s, there has been a significant increase in PPP use in the public sector in Europe, benefiting the implementation of infrastructure projects. In Italy, PPP is still much more limited than in such countries as the UK and France: the projects funded are smaller and the sectors involved are less appropriate. Based on the economic literature, European initiatives and international comparisons, the paper examines aspects of regulations that could encourage the appropriate use of PPP and considers the problems with the Italian regulations, while proposing some corrective measures. The main limitations involve: i) the absence of adequate preliminary assessments about the advantages of using PPP rather than the traditional procurement, ii) the relative lack of attention to the contract terms, iii) inadequate safeguards to ensure the bankability of the projects, and iv) limited information transparency and accessibility.

Infrastructure development is critical for sustaining Asia’s economic growth. Unfortunately, huge financing gaps—estimated by a recent Asian Development Bank study to be USD22.5 trillion—constrain the ability of most emerging Asian countries to fully realize the benefits of infrastructure development. For instance, over 70% of infrastructure investments in Asia are still funded by public resources, which pose acute financing challenges for many countries with limited budgets and fiscal constraints. This paper discusses some of the challenges associated with public financing of infrastructure projects in emerging Asian countries, before introducing some new options for alleviating their infrastructure investment needs. In particular, it proposes a new approach to infrastructure financing by utilizing the spillover effects of infrastructure investment, where additional revenues generated from such investment can be channeled back to investors as subsidy to increase the returns to their investment. The paper also argues the need for Asian countries to implement fiscal reforms and to develop a more balanced approach to financing, one that involves both the private and public sector.