Ideas to Action:

Independent research for global prosperity

Publications

 

Guarantees, Subsidies, or Paying for Success? Choosing the Right Instruments to Catalyze Private Investment in Developing Countries - Working Paper 402
May 5, 2015

Guarantees, Subsidies, or Paying for Success? Choosing the Right Instrument to Catalyze Private Investment in Developing Countries - Working Paper 402

Governments, donors, and public sector agencies are seeking productive ways to ‘crowd in’ private sector involvement and capital to tackle international development challenges. The financial instruments that are used to create incentives for private sector involvement are typically those that lower an investment’s risk (such as credit guarantees) or those that lower the costs of various inputs (such as concessional loans, which subsidise borrowing).