Regional dimensions of recent investment weakness: Facts, investment needs and policy responses

Abstract

Investment growth in many emerging market and developing economies (EMDEs) has slowed sharply since 2010. Investment growth performance has varied significantly across different regions, however. This paper examines the evolution of investment growth in six EMDE regions, documents remaining investment needs, especially for infrastructure, and presents a set of region-specific policy responses to address these needs. It reports three main findings. First, investment growth has been particularly weak in EMDE regions hosting a large number of commodity exporters. In regions with a substantial number of commodity-importing economies, investment growth has been somewhat resilient but has also declined steadily since 2010. Second, sizable investment needs remain in most EMDE regions to make room for expanding economic activity and rapid urbanization. A large portion of these investment needs is in infrastructure and human capital. Finally, while specific policy priorities vary across regions, several policy options to address remaining investment needs apply universally. These include more, and more efficient, public investment and measures to improve overall growth prospects and the business climate. Improved project selection and monitoring, as well as better governance, may enhance the efficiency and benefits from public investment.

Анализ Факторов Роста Российской Рекламной Индустрии В Условиях Санкций

“…In each year between 2012 and 2020, investment growth was well below the pre-global financial crisis (2000-08) average in well over half of EMDEs. The slowdown during the 2010s occurred in both commodity-exporting and commodity-importing EMDEs, and in all EMDE regions (Vashakmadze et al 2018;figure 3.1.C). Slowing investment growth in China made a large contribution to the aggregate EMDE slowdown (figure 3.1.D).…”

The impact of infrastructure investment on economic growth in the United Kingdom

“…If the level of infrastructure falls below a critical level, productivity suffers, resulting in a contraction of the economy, as accumulation of transport infrastructure grows but the positive impact of that growth decreases (Pereira and Pereira, 2018). Infrastructure also has inverse multiplier effects during periods of reduced investment (Vashakmadze et al, 2018). Infrastructure does not instigate growth but rather it can stimulate growth in positive economic conditions (Domański and Gwosdz, 2010).…”

“…Earlier studies have shown that there has been an increase in spending over the last ten years to compensate for the neglect of public capital spending during the 1990s (Romp and de Haan, 2007). The renewal and improvement of infrastructure across Europe are seen as necessary to regional development strategies (European Investment Bank (EIB), 2019), which is particularly important to regions which are peripheral to the core economic and industrialized region (Vashakmadze et al, 2018;Turnovsky, 2015). The UK National Infrastructure Delivery Plan 2016-2021, the European Union Trans-European Networks for Energy (TEN-E) strategy, and the G20 have developed "the Roadmap" to define infrastructure as an asset class.…”

“…There are therefore strong arguments for a restructuring of the current funding system and the use of devolution to give cities and regions more power in terms of decision making and allocation of funds (Helm, 2013). However, the cost-to-value analysis for establishing infrastructure projects that are best to pursue is sometimes problematic, with betteroff regions attracting investment (Vashakmadze et al, 2018), while other less attractive regions fall further behind (The Economist, 2017), resulting in an imbalance of infrastructure funding in the UK. Furthermore, the UK Government's intervention exposes investment bias, which is reflected in terms of political risks and policy, political ideologies, differing project appraisals, and the limitations in the planning system (Rumfitt, 2017).…”

Corporate debt overhang and investment in emerging economies: Firm‐level evidence

“…At the same time, investment growth in EMDEs has slowed sharply after 2011, posing challenges for the longer‐term growth prospects of these economies (Kose et al, 2017; Vashakmadze et al, 2018; World Bank, 2017). In China and other EMDEs, private investment growth in the postcrisis period was substantially below their longer‐term (1995–2008) average rates.…”