Public Infrastructure Financing Models in Emerging Economies: A Conceptual and Comparative Review

Abstract

The persistent gap between infrastructure investment needs and fiscal capacity in Latin American countries represents one of the most critical bottlenecks for sustainable economic development. The region requires investing approximately 3.12% of its gross domestic product (GDP) annually through 2030 to maintain and expand infrastructure in key sectors including transportation, energy, water, and sanitation yet historical average investment has not exceeded 1.8% of GDP.

Infrastructure projects face structural challenges stemming from the magnitude of initial capital outlays, multi-decade payback horizons, and complex risk distribution across construction, demand, operations, financing, and regulatory dimensions. Against this backdrop, a diverse family of financing instruments has emerged, evolving from traditional models budgeted public works and classical concessions toward sophisticated schemes that mobilize private capital, such as public-private partnerships, project finance, asset securitization, shadow tolls, turnkey contracts, public leasing, and revolving funds.

This article provides a comprehensive review of these models, integrating standard financial evaluation tools (net present value, internal rate of return, debt service coverage indicators) with contemporary literature on renegotiations, cost overruns, and contingent fiscal risks in infrastructure projects. Additionally, a methodological framework is proposed for comparative empirical research that combines statistical and econometric analysis with project performance assessment. The resulting recommendations aim to strengthen technical capacity in public entities, improve regulatory frameworks for private participation, and establish robust databases for systematic quantitative analysis in Latin American and Colombian contexts.