The geopolitical economy of infrastructure financing: state-led and market-based entanglements in Indonesia

Authors: Dimitar Anguelov*, UCLA
Topics: Economic Geography, Political Geography, Asia
Keywords: geopolitical economy, development, financialization, infrastructure
Session Type: Paper
Day: 4/5/2019
Start / End Time: 1:10 PM / 2:50 PM
Room: Capitol Room, Omni, East
Presentation File: No File Uploaded

With financial interests increasingly pressuring governments to transform infrastructure from public good to financial asset, its development and financing has emerged as a key agenda item of multilateral policy banks promoting policy frameworks and financial instruments to developing nations seeking to address infrastructural needs. At the same time, infrastructure financing has become an arena for the geopolitical and geoeconomic strategies of different creditor nations, aiming to exert influence and extend their national interests on the global stage. These emergent actors aim to promote alternative visions, rationalities and practices of development. Whereas the multilateral banks, backed by Western market-democratic states, aim to cement a market-based Public-Private Partnership (PPP) model as the global norm in infrastructure finance, China is forging state-led alternatives as it attempts to reshape the global infrastructure investment landscape. With developing countries increasingly caught in the crosscurrents of these contrasting but far from mutually exclusive approaches, it is imperative that we understand how they come together in such countries, including the friction they experience as they confront the political-economic contexts of those places. I examine these processes in Indonesia. I analyze how the market rationalities underpinning the PPP policy framework intersect with, and are co-constituted through financial interests and logic, showing that the success of this policy framework depends on the production of financially viable projects and the infrastructure debt markets needed to finance these projects. Going beyond this, I investigate how state-led Chinese and Japanese geopolitical and geoeconomic interests operate alongside, through and in opposition to this framework.

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