A ‘Real Options’ Perspective to Development Finance-Related Investment Decisions

Danny Cassimon and Peter-Jan Engelen

Africagrowth Agenda, 2022, vol. 19, issue 2, 4-8

Abstract: In this contribution, we explain the basics of the real option approach to development finance related investment decisions, and how it alters the conventional investment decision-making rule. We then show its relevance to development finance-related decision-making investment decisions broadly speaking, and more specifically how it can be applied to inform public-sector interventions in order to crowd-in the private sector to invest in development- relevant projects, and generate additional finance to meet the Sustainable Development Goals (SDGs) and other current global (development) challenges, i.e. the so-called ‘blended finance’ approach. Along the way, some particular examples are included to show concrete applicability in practice and generate ideas for further research.

Date: 2022
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