The high costs of international trade represent a serious constraint on the economic development of landlocked developing countries. Inadequate infrastructure (transport, telecommunications, electric power etc.) adds heavy costs to the production and export of goods, hampering their competitiveness in regional and international markets. Lack of adequate government financial resources (due to financial crises, budget deficits, international adjustment and austerity programmes) to maintain appropriate levels of investment both in the maintenance and in the modernization of infrastructure services, aggravated by a decline in concessional aid (both bilateral and multilateral) for infrastructure development and by customers' demand for more efficient and sophisticated logistical services, have opened the door to private sector capital and management expertise. Many developing countries have now introduced some form of private sector involvement in infrastructure. However, for many landlocked and least developed countries attracting private sector investment in infrastructure remains a major challenge owing to investors' perceptions of high country risk. For these countries, purely private financing schemes may not be feasible in many cases. However, a combination of private and public participation, together with the involvement of specific regional funds, local capital and increased official development assistance flows, could offer a viable solution. To that end, donors and international financial and development agencies are invited to promote innovative financial mechanisms which could help landlocked and transit developing countries meet their infrastructure financing and management needs
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International Institute for Trade and Developement : UNCTAD Collection
