Market Survey of Subnational Finance in Asia and the Pacific.

Abstract

Encouraged by decentralizing national governments, the development and financing of projects by subnational public sector entities is expanding in the Asia and Pacific region. The work undertaken for this report focused on infrastructure and utilities as a proxy for the magnitude of financial demand by subnational entities in Asia and the Pacific. The increasing role of subnational entities in providing infrastructure is driven by underlying trends of decentralization, sustainability and urbanization. Research over the past two decades indicates high returns and significant contributions to economic growth from infrastructure investment. The debate over who should be responsible for infrastructure investment decisions has prompted shifts in government policy, public attitudes and intellectual discourse. Twenty-five years ago, the state controlled infrastructure services in virtually all developing countries through ownership of vertically integrated utilities and other infrastructure entities. Today, there is a discernable trend of infrastructure service delivery being decentralized to subnational government and private entities. No matter how infrastructure services are being delivered, the value judgment that ultimately matters is made by the purchaser and consumer of these services. In this sense, infrastructure demand is and has always been decentralized.