Financing Foreign Infrastructure: Untangling Economic and Security Motivations

Why do states finance and construct foreign infrastructure? Are they motivated by economic or security logics? Amidst the growing interest in what motivates states, such as China, to invest billions in foreign infrastructure projects, this article offers a novel way of untangling state motivations. It theorizes that the physical and technological characteristics of infrastructure assets determine the types of economic and security returns they provide to investor states. We test the plausibility of this theory in the domain of energy via a network analysis based on thousands of public financial transactions for foreign energy projects, combined with a detailed analytical narrative of the Cahora Bassa hydroelectric transmission project. Our theory and findings have important implications for scholars and policymakers, including by showing how the characteristics of infrastructure assets offer a means to better understand state motivations.