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Domestic Investment and the Cost of Capital in the Caribbean

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  • Shaun K. Roache

Abstract

Investment rates across the Caribbean tend to be high and have been rising, reflecting increased public investment and FDI. Domestic investors have been less prominent. This may be one reason why such high investment has delivered Caribbean growth rates below the middle-income average. This paper seeks to understand how higher private investment may be encouraged. Using new data, it concludes public investment and FDI multipliers on private domestic investment (PDI) are weak. Also, PDI is sensitive to the cost of capital; policies designed to raise PDI should focus on reducing these costs rather than the multiplier effects of public spending.

Suggested Citation

  • Shaun K. Roache, 2006. "Domestic Investment and the Cost of Capital in the Caribbean," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 6(3).
    • Handle: RePEc:eaa:aeinde:v:6:y:2006:i:3_9
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    References listed on IDEAS

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    1. 38. Selected Readings on World Development in journal AEID: America, 2001-2020
      by MCG Blogs de Economía in Euro-American Association: World Development on 2020-01-17 20:24:00

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    Cited by:

    1. Adama Messanh COMBEY, 2016. "The Main Determinants of Private Investments in the WAEMU Zone: The Dynamic Approach," Journal of Economics and Political Economy, KSP Journals, vol. 3(4), pages 731-743, December.
    2. International Monetary Fund, 2007. "Eastern Caribbean Currency Union: Selected Issues," IMF Staff Country Reports 2007/097, International Monetary Fund.
    3. COMBEY, Adama, 2016. "The Main Determinants of Private Investment in The WAEMU Zone: The Dynamic Approach," MPRA Paper 75382, University Library of Munich, Germany.
    4. Koffie Ben Nassar & Mr. Joel Chiedu Okwuokei & Mike Li & Timothy Robinson & Mr. Saji Thomas, 2016. "National Insurance Scheme Reforms in the Caribbean," IMF Working Papers 2016/206, International Monetary Fund.
    5. Mr. Shaun K. Roache, 2007. "Public Investment and Growth in the Eastern Caribbean," IMF Working Papers 2007/124, International Monetary Fund.
    6. Tuomas A. Peltonen & Ricardo M. Sousa & Isabel S. Vansteenkiste, 2009. "Asset prices, Credit and Investment in Emerging Markets," NIPE Working Papers 18/2009, NIPE - Universidade do Minho.

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    JEL classification:

    • C45 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Neural Networks and Related Topics

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