Who funds whose infrastructure? Country dyadic analysis of global project finance loans

Ruilin Lai, Ilker Karaca and Ji Yeon Hong

Review of International Political Economy, 2025, vol. 32, issue 2, 310-328

Abstract: Global project finance investments have become one of the primary funding mechanisms for large infrastructure projects worldwide over the past few decades. This paper examines the country-level dynamics of global project finance loans from 1981 to 2018, using data from all project finance deals reported in the DealScan database. Our analysis reveals that most international project finance loans originate from banks and financial institutions in advanced democracies, while the recipient countries vary widely in terms of regime type and economic development. Through systematic visualization and statistical analysis, we find that transnational capital flows for infrastructure projects are more likely to occur between countries with similar political systems or between those with starkly different regimes. This finding indicates significant lending and borrowing between full democracies and closed autocracies, suggesting that investments raised in liberal democracies enable some of the most closed dictatorships to finance their infrastructure development. The study suggests that closed and repressive regimes might substantially benefit from the globalized project financing system, warranting increased attention from scholars in International Political Economy on political implications of the globalized project finance market.

Date: 2025
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DOI: 10.1080/09692290.2024.2421515

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Review of International Political Economy is currently edited by Gregory Chin, Juliet Johnson, Daniel Mügge, Kevin Gallagher, Ilene Grabel and Cornelia Woll

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