Investment Issues In South-Eastern Europe
AbstractThe 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.
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Bibliographic InfoPaper provided by European Investment Bank, Economics Department in its series Economic and Financial Reports with number 2000/2.
Length: 14 pages
Date of creation: 01 Mar 2000
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Investment; South-Eastern Europe; Savings;
Find related papers by JEL classification:
- E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Capital; Investment; Capacity
- O16 - Economic Development, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
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