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

Author

Listed:
  • Vashakmadze,Ekaterine T.
  • Kambou,Gerard
  • Chen,Derek Hung Chiat
  • Nandwa,Boaz
  • Okawa,Yohei
  • Vorisek,Dana Lauren

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 temporal 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 with 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 sizeable 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, or 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.

Suggested Citation

  • Vashakmadze,Ekaterine T. & Kambou,Gerard & Chen,Derek Hung Chiat & Nandwa,Boaz & Okawa,Yohei & Vorisek,Dana Lauren, 2017. "Regional dimensions of recent weakness in investment : drivers, investment needs and policy responses," Policy Research Working Paper Series 7991, The World Bank.
    • Handle: RePEc:wbk:wbrwps:7991
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    Citations

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    Cited by:

    1. Wee Chian Koh & Shu Yu, 2021. "A Decade After the 2009 Global Recession: Macroeconomic Developments," Journal of International Commerce, Economics and Policy (JICEP), World Scientific Publishing Co. Pte. Ltd., vol. 12(02), pages 1-24, June.
    2. Sinem Kilic Celik & M. Ayhan Kose & Franziska Ohnsorge, 2020. "Subdued Potential Growth: Sources and Remedies," Koç University-TUSIAD Economic Research Forum Working Papers 2009, Koc University-TUSIAD Economic Research Forum.
    3. Germán Gutiérrez & Thomas Philippon, 2017. "Investmentless Growth: An Empirical Investigation," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 48(2 (Fall)), pages 89-190.
    4. Akçay Selçuk & Karasoy Alper, 2020. "Determinants of private investments in Turkey: Examining the role of democracy," Review of Economic Perspectives, Sciendo, vol. 20(1), pages 23-49, March.
    5. Farrell, Katharine N. & Löw Beer, David, 2019. "Producing the ecological economy: A study in developing fiduciary principles supporting the application of flow-fund consistent investment criteria for sovereign wealth funds," Ecological Economics, Elsevier, vol. 165(C), pages 1-1.

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