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Investment Issues In South-Eastern Europe

Author

Listed:
  • Hurst, Christopher

    (European Investment Bank, Projects Directorate)

  • Uppenberg, Kristian

    (European Investment Bank, Economic and Financial Studies)

Abstract

The paper is organised as follows: The first section reviews the recent trends in investment rates in South-Eastern Europe (SEE). The low level of investment in the region emerges clearly from this discussion. To explain the low investment rates, we then look at the other side of the savings-investment identity. In particular, we split savings into a foreign component, a government component, and a domestic private sector component. The key weakness is the poor private sector savings rate. Indeed, very large capital inflows into the region are needed to close the domestic savings-investment gap, even though investment is at low levels to begin with. In the following three sections we discuss the key components of savings in turn to see where gains may come from in the future. We argue that increasing corporate retained earnings is the key short to medium term solution. Some policy measures to achieve this goal are briefly outlined.

Suggested Citation

  • Hurst, Christopher & Uppenberg, Kristian, 2000. "Investment Issues In South-Eastern Europe," Economic and Financial Reports 2000/2, European Investment Bank, Economics Department.
    • Handle: RePEc:ris:eibefr:2000_002
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    Citations

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    Cited by:

    1. Wagenvoort, Rien & de Nicola, Carlo & Kappeler, Andreas, 2010. "Infrastructure finance in Europe: Composition, evolution and crisis impact," EIB Papers 1/2010, European Investment Bank, Economics Department.
    2. Estache, Antonio, 2010. "Infrastructure finance in developing countries: An overview," EIB Papers 8/2010, European Investment Bank, Economics Department.
    3. Bitsch, Florian & Buchner, Axel & Kaserer, Christoph, 2010. "Risk, return and cash flow characteristics of infrastructure fund investments," EIB Papers 4/2010, European Investment Bank, Economics Department.
    4. Fay, Marianne & Iimi, Atsushi & Perrissin-Fabert, Baptiste, 2010. "Financing greener and climate-resilient infrastructure in developing countries - challenges and opportunities," EIB Papers 7/2010, European Investment Bank, Economics Department.
    5. Eduardo Engel & Ronald Fischer & Alexander Galetovic, 2010. "The economics of infrastructure finance: Public-private partnerships versus public provision," Documentos de Trabajo 276, Centro de Economía Aplicada, Universidad de Chile.
    6. Stewart, James, 2010. "The UK National Infrastructure Plan 2010," EIB Papers 6/2010, European Investment Bank, Economics Department.
    7. Helm, Dieter, 2010. "Infrastructure and infrastructure finance: The role of the government and the private sector in the current world," EIB Papers 5/2010, European Investment Bank, Economics Department.
    8. Inderst, Georg, 2010. "Infrastructure as an asset class," EIB Papers 3/2010, European Investment Bank, Economics Department.

    More about this item

    Keywords

    Investment; South-Eastern Europe; Savings;
    All these keywords.

    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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