Funding public infrastructure investments: The evaluation of usefulness of capital market

Infrastructure facilities and services have great significance in terms of economic growth and social welfare in a country. Particularly, in parallel with rapid population growth, urbanization, globalization and industrialization, there happened significant increases in infrastructure services and investments which are provided by central and local governments in the last years. Once infrastructure facilities and services like energy, communication, transportation and water-sewerage which can be divided into many subgroups, require huge amounts of investments,, they have been provided in large extent by public sector for many years. Because of the inadequacy of the public sources to finance sustainable infrastructure investments, Municipal Bonds have become significant instrument in that they enable getting funds from Capital Markets. Besides, Private Sector Participation has also been frequently applied to finance these investments in both emerging and developed countries.In this study, the implementation of alternative financing models in funding public infrastructure investments are to be examined in more detail. The main aim of this study is to unfold the possible alternative models that can also be adopted in Turkey, as well as to what extent the involved alternative financing models have already been in use. Needless to say, the policies targeting to unify and integrate Turkey with the EU necessitate mounting the Turkish infrastructure investments to the European countries? level. This target inevitably requires larger funds also. As a consequence, this study aims at explaining why among other alternative financing models, ?Municipal Bonds? are functional in diversifying securities for investors in capital markets as well as providing funds with a longer maturity for the bond issuers thereby cushioning, the investment risk decreasing financial load on the public sector and increasing social welfare.Key Words: Infrastructure Investments, Funding Infrastructure Investments, Public Private Partnerships, Municipal Bonds.