Financial Returns to Equity Investments in Infrastructure in Emerging-Market and Developing Economies

Anusha Chari; Peter Blair Henry; Yanru Lee; Paolo Mauro

doi:10.3386/w34537

Financial Returns to Equity Investments in Infrastructure in Emerging-Market and Developing Economies

Anusha Chari, Peter Blair Henry, Yanru Lee & Paolo Mauro

Working Paper 34537

DOI 10.3386/w34537

Issue Date December 2025

Despite the scarcity of infrastructure in emerging-market and developing economies (EMDEs), in the absence of readily accessible data on the historical performance of EMDE infrastructure as an asset class, private investors are reluctant to finance infrastructure projects in these countries. We begin to fill this information gap by computing the financial returns from equity investments in primarily unlisted firms in EMDEs made by the International Finance Corporation, the private-sector arm of the World Bank Group. The public market equivalent of 266 equity investments in core infrastructure by the IFC, with starting dates from 1961 to March 2020, was 1.17 using the S&P 500 as a benchmark, and 1.26 using the MSCI Emerging Markets Index. On average, over the past six decades, equity stakes in emerging-market infrastructure backed by the IFC thus delivered higher returns than investments in portfolios of publicly listed equities. Data from the full sample of IFC equity investments reveal that, on average, a diversified portfolio of investments in infrastructure-related sectors, and indeed, in all sectors more generally, generated significant positive financial returns, albeit with variation across decades.

Anusha Chari is Professor of Economics and Finance at the University of North Carolina, Chapel Hill. Peter Blair Henry is the Class of 1984 Senior Fellow at Stanford University’s Hoover Institution, Senior Fellow at Stanford’s Freeman Spogli Institute, and Dean Emeritus of New York University’s Leonard N. Stern School of Business. Yanru Lee is a Research Fellow at Stanford University’s Hoover Institution. Paolo Mauro is Director, Economic and Market Research Department at the International Finance Corporation. We gratefully acknowledge contributions from Florian Moelders (IFC), Peter Mugemancuro (Hoover), and Edgar Salgado (IFC). The authors also thank Mengistu Alemayehu, Federico Galizia, John Gandolfo, and Rapti Goonesekere for helpful comments. The findings, interpretations, and conclusions expressed in this note do not necessarily reflect the views of the Executive Directors of The World Bank Group, the governments they represent, or the National Bureau of Economic Research.

Peter Blair Henry
1) The data used in this paper is non-proprietary, and I have not received any financial support related to the research, writing, or publication of the above article from any interested party.

2) In addition to my positions at Stanford University I currently serve as a member of the Board of Directors of Analog Devices, Citigroup, and Nike. No compensation from these Board activities has been connected in any way to the content of this paper. I am also Chair of the NBER Board and Principal Investigator for the Sloan Foundation-funded PhD Excellence Initiative (see below).

3) Other than my salary from Stanford and compensation described above, no single relationship or activity has accounted for more than 10% of my aggregate annual income in a year.

4) No member of my family has any relevant or material financial interests that relate to the research described in this paper.

5) I am the principal investigator (PI) for the PhD Excellence Initiative, a Sloan Foundation funded program that prepares students for the rigors of doctoral studies in economics. I acknowledge financial support from the Sloan Foundation.

5) Significant non-compensated affiliations include: National Bureau of Economic Research (Chair). The NBER has not provided me with any financial support for this research.

6) No external party has reviewed the paper, except to check for clarity and felicity of language.

Peter Blair Henry

Paolo Mauro
I am a full time employee of the International Finance Corporation.
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Anusha Chari, Peter Blair Henry, Yanru Lee, and Paolo Mauro, "Financial Returns to Equity Investments in Infrastructure in Emerging-Market and Developing Economies," NBER Working Paper 34537 (2025), https://doi.org/10.3386/w34537.

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Financial Returns to Equity Investments in Infrastructure in Emerging-Market and Developing Economies

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