Investment Gaps in IDB Borrowing Countries

Produced by: 
Graduate Institute Geneva
Available from: 
March 2018
Paper author(s): 
Francesca Castellani
Marcelo Olarreaga
Ugo Panizza
Yue Zhou
Topic: 
Financial Economics
Year: 
2018

We estimate public investment gaps in a sample of developing countries using a public investment demand function. We then use GDP per capita projections, forecasts of structural transformation, and three SDG targets (poverty, infant mortality and lower secondary school completion) to predict public investment needs in 2030 among IDB borrowing countries. Our estimates suggest that in 2014 the total public investment gap of IDB borrowers was close to $170 billion (3.1 percent of the Region’s GDP) and that the gap is expected to surpass $717 billion (6.3 percent of the Region’s GDP) by 2030 if the SDGs were to be reached.

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