Regional Dimensions of Recent Weakness in Investment: Drivers, Investment Needs and Policy Responses

60 Pages Posted: 13 Mar 2017 Last revised: 3 Aug 2017

See all articles by Ekaterine Vashakmadze

Ekaterine Vashakmadze

World Bank

Gerard Kambou

World Bank

Derek Hung Chiat Chen

World Bank

Boaz Nandwa

World Bank

Yohei Okawa

University of Virginia - Department of Economics

Dana Vorisek

World Bank

Date Written: March 2, 2017

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.

Keywords: Economic Growth, Economic Theory & Research, Consumption, Industrial Economics, Fiscal & Monetary Policy

Suggested Citation

Vashakmadze, Ekaterine and Kambou, Gerard and Chen, Derek Hung Chiat and Nandwa, Boaz and Okawa, Yohei and Vorisek, Dana, Regional Dimensions of Recent Weakness in Investment: Drivers, Investment Needs and Policy Responses (March 2, 2017). World Bank Policy Research Working Paper No. 7991, Available at SSRN: https://ssrn.com/abstract=2931803

Ekaterine Vashakmadze (Contact Author)

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

Gerard Kambou

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

Derek Hung Chiat Chen

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

Boaz Nandwa

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

Yohei Okawa

University of Virginia - Department of Economics ( email )

P.O. Box 400182
Charlottesville, VA 22904-4182
United States

Dana Vorisek

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

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