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The elusive quest for additionality

Patrick Carter (), Nicolas Van de Sijpe () and Raphael Calel

World Development, 2021, vol. 141, issue C

Abstract: Development finance institutions (DFIs) annually invest $90 billion to support under-financed projects across the world. Although these government-backed institutions are often asked to show that their investments are “additional” to what private investors would have financed, it is rarely clear what evidence is needed to answer this request. This paper demonstrates, through a series of simulations, that the nature of DFIs’ operations creates systematic biases in how a range of estimators assess additionality. Recognizing that rigorous quantitative evidence of additionality may continue to elude us, we discuss the value of qualitative evidence, and propose a probabilistic approach to evaluating additionality.

Keywords: Development Finance Institutions; Investment; Additionality; Simulation (search for similar items in EconPapers)
JEL-codes: F21 F35 G15 O16 O19 (search for similar items in EconPapers)
Date: 2021
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Working Paper: The Elusive Quest for Additionality (2019) Downloads
Working Paper: The Elusive Quest for Additionality (2018) Downloads
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DOI: 10.1016/j.worlddev.2021.105393

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