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The Elusive Quest for Additionality

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

No 2019022, Working Papers from The University of Sheffield, Department of Economics

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. Recognising 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)
Pages: 46 pages
Date: 2019-12
New Economics Papers: this item is included in nep-fdg
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