scholarly journals Regional dimensions of recent investment weakness: Facts, investment needs and policy responses

2018 ◽  
Vol 2 (1) ◽  
pp. 37 ◽  
Author(s):  
Ekaterine Vashakmadze ◽  
Gerard Kambou ◽  
Derek Chen ◽  
Boaz Nandwa ◽  
Yoki Okawa ◽  
...  
Keyword(s):  
Economic Activity ◽  
Developing Economies ◽  
Public Investment ◽  
Emerging Market ◽  
Business Climate ◽  
Rapid Urbanization ◽  
Specific Policy ◽  
Policy Responses ◽  
Growth Prospects ◽  
Investment Growth

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 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 hosting 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 large 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, and 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.

Interest Groups, Policy Responses to Global Shocks, and the Relative Likelihood of Currency Crashes Versus Banking Crises

2019 ◽  
Vol 10 (02) ◽  
pp. 1950010
Author(s):  
Jacob M. Meyer ◽  
Nicholas R. Jenkins
Keyword(s):  
Interest Groups ◽  
Financial Stability ◽  
Fixed Effects ◽  
Developing Economies ◽  
Emerging Market ◽  
Banking Crises ◽  
Internal Response ◽  
Relative Likelihood ◽  
Policy Responses ◽  
Global Shocks

Shocks to global interest rates or risk cause capital outflows for countries outside the core of the global financial system. These outflows lead to downward pressure on exchange rates and financial sector stress, in addition to having general contractionary effects. To defend the exchange rate, the appropriate internal response is a fiscal/monetary contraction. To maintain full employment and financial stability, the appropriate internal response is fiscal/monetary expansion. The contradiction in these policy responses implies policymakers prioritize hitting either internal or external targets after these shocks; but how do they decide? Using a fixed effects model and data from 100 emerging market and developing economies from 1990 to 2012, we show that the relative sensitivity of interest groups to these policy responses influences which response occurs. We find some evidence that this effect is stronger in the presence of more political-institutional constraints. Using a strategic probit model, we also find some evidence that this policy response influences the relative likelihood of banking crises versus currency crashes after these global shocks.

Anchoring Growth: The Importance of Productivity-Enhancing Reforms in Emerging Market and Developing Economies

2014 ◽  
Vol 05 (02) ◽  
pp. 1450001 ◽  
Author(s):  
Era Dabla-Norris ◽  
Giang Ho ◽  
Kalpana Kochhar ◽  
Annette Kyobe ◽  
Robert Tchaidze
Keyword(s):  
Developing Economies ◽  
Emerging Market ◽  
Supply Side ◽  
The Past ◽  
Sectoral Productivity ◽  
Growth Prospects ◽  
Increase Productivity ◽  
Broad Policy ◽  
Future Growth

This paper examines the supply side drivers of growth in emerging market and developing economics (EMDEs) during the past decades and discusses the role of productivity-enhancing reforms in bolstering future growth prospects. It examines aggregate and sectoral productivity trends including around reform episodes to draw broad policy lessons on what policies are needed to increase productivity. Findings suggest appropriate policies need to be tailored to the stage of economic development and to other pertinent features that give rise to the heterogeneous experiences of EMDEs.

scholarly journals The Price of Capital Goods

2019 ◽  
Vol 19 (134) ◽  
pp. 1 ◽  
Author(s):  
Weicheng Lian ◽  
Natalija Novta ◽  
Evgenia Pugacheva ◽  
Yannick Timmer ◽  
Petia Topalova
Keyword(s):  
Developing Economies ◽  
Emerging Market ◽  
Relative Price ◽  
Trade Integration ◽  
Capital Goods ◽  
The Past ◽  
Time Period ◽  
Cross Country ◽  
Investment Growth ◽  
Additional Channel

Over the past three decades, the price of machinery and equipment fell dramatically relative to other prices in advanced and emerging market and developing economies. Using cross-country and sectoral data, we show that the decline in the relative price of tangible tradable capital goods provided a significant impetus to the capital deepening that took place during the same time period. The broad-based decline in the relative price of machinery and equipment, in turn, was driven by the faster productivity growth in the capital goods producing sectors relative to the rest of the economy, and deeper trade integration, which induced domestic producers to lower prices and increase their efficiency. Our findings suggest an additional channel through which rising trade tensions and sluggish productivity could threaten real investment growth going forward.

scholarly journals Addis Ababa Urbanism: Indigenous Urban Legacies and Contemporary Challenges

2017 ◽  
Vol 9 (1) ◽  
pp. 25 ◽  
Author(s):  
Elena Givental
Keyword(s):  
Economic Activity ◽  
Addis Ababa ◽  
Emerging Market ◽  
Urban Housing ◽  
Rapid Urbanization ◽  
Gdp Growth Rate ◽  
Entire Country ◽  
Low Levels ◽  
Poverty Elimination ◽  
The City

Addis Ababa, the capital of Ethiopia, has been experiencing rapid urbanization as the entire country has transformed into an emerging market economy featuring a spectacular average ten percent GDP growth rate over the last ten years. However, this economic growth has not provided a poverty elimination momentum for the city where over half of its residents still live in slum areas and over thirty percent are unemployed or involved in informal economic activity. This paper examines the factors behind Addis Ababa’s inhibited urban progress focusing on urban legacies stemming from the city’s one-hundred-thirty years of independent development as well as on the present-day economic challenges. The empirical evidence suggests that there is a correlation between Addis Ababa’s inadequate investment in urban housing and infrastructure and Ethiopia’s low levels of foreign direct investment. Further analysis indicates that the country’s service-driven growth model of development may be contributing to overurbanization and poverty production in Addis Ababa.

scholarly journals COVID-19 Impact and Mitigation Policies

2020 ◽  
Vol 20 (233) ◽  
Author(s):  
John Ansah ◽  
Natan Epstein ◽  
Valeriu Nalban
Keyword(s):  
Economic Activity ◽  
Developing Economies ◽  
Emerging Market ◽  
Mitigation Measures ◽  
Current State ◽  
Effective Contact ◽  
Contact Frequency ◽  
Health Related ◽  
Shed Light ◽  
Mitigation Policies

We develop an integrated epidemiological-macroeconomic model to analyze the interplay between the COVID-19 outbreak and economic activity, as a tool for capacity building purposes. We illustrate a workhorse framework that combines a rich epidemiological model with an economic block to shed light on the tradeoffs between saving lives and preserving economic outcomes under various mitigation policies and scenarios calibrated for emerging market and developing economies. In our benchmark setup, we link the effective contact frequency and labor supply decisions to the current state of the disease progression, allowing for relevant behavioral responses that introduce multiple feedback channels. We showcase the effects of various “smart” mitigation measures, e.g. improved quarantine capacity or targeted labor market restrictions, to alleviate the tradeoffs between health-related outcomes and economic activity, including in response to a second infection wave. The discovery of treatment or vaccine, and the possibility of temporary immunity for the recovered individuals are also considered. The model is further extended to a multisector framework to analyze the sectoral allocation effects of the COVID-19 shock.

scholarly journals Constraints to the Economic Growth of Pakistan: A Three-gap Approach

1995 ◽  
Vol 34 (4III) ◽  
pp. 1119-1133 ◽  
Author(s):  
Zafar Iqbal
Keyword(s):  
Economic Growth ◽  
Foreign Exchange ◽  
Developing Economies ◽  
Public Investment ◽  
Gap Model ◽  
Potential Output ◽  
Fiscal Constraint ◽  
Domestic Savings ◽  
Growth Prospects ◽  
The Impact

The development of the two-gap model [Chenery and Bruno (1962); Chenery and Strout (1966); Mckinnon (1964); and Weisskopf (1972)] was an important contribution to the literature of economic development. The two-gap model deals with the interactions between the savings constraint and the foreign exchange constraint in the determination of economic growth in an economy. The savings constraint refers to the situation when the growth of an economy is limited by the availability of domestic savings for investment, and the foreign exchange constraint refers to the growth of an economy being limited by the availability of foreign exchange for importing capital goods. Mbre recently, there has been increasing interest in the three-gap model, introducing fiscal constraint as a third gap limiting the growth prospects of highly indebted developing economies [Bacha (1990); Solimano (1990) and Taylor (1993, 1994)]. The fiscal constraint is intended to reflect the impact of the availability of resources to finance the public investment required to support a given level of potential output. These constraints are selected for analysis because of their direct impact on economic growth of Pakistan. The paper is structured as follows: Section 2 presents the three-gap model; in Section 3, the economy-wide potential output and capacity utilisation of Pakistan are estimated; in Section 4, the empirical results are discussed; the conclusions are summarised in Section 5.

Work-from-home during COVID-19: Accounting for the care economy to build back better

2021 ◽  
pp. 103530462098360
Author(s):  
Fiona Jenkins ◽  
Julie Smith
Keyword(s):  
Economic Activity ◽  
Public Investment ◽  
Economic Life ◽  
Rapid Adaptation ◽  
Policy Makers ◽  
Jel Codes ◽  
Work From Home ◽  
Adaptive Capabilities ◽  
Care Economy ◽  
A Site

In the COVID-19 pandemic, people’s dwellings suddenly became a predominant site of economic activity. We argue that, predictably, policy-makers and employers took the home for granted as a background support of economic life. Acting as if home is a cost-less resource that is free for appropriation in an emergency, ignoring how home functions as a site of gendered relations of care and labour, and assuming home is a largely harmonious site, all shaped the invisibility of the imposition. Taking employee flexibility for granted and presenting work-from-home as a privilege offered by generous employers assumed rapid adaptation. As Australia emerges from lockdown, ‘building back better’ to meet future shocks entails better supporting adaptive capabilities of workers in the care economy, and of homes that have likewise played an unacknowledged role as buffer and shelter for the economy. Investing in infrastructure capable of providing a more equitable basis for future resilience is urgent to reap the benefits that work-from-home offers. This article points to the need for rethinking public investment and infrastructure priorities for economic recovery and reconstruction in the light of a gender perspective on COVID-19 ‘lockdown’ experience. JEL Codes: E01, E22, J24

scholarly journals The Persistent Effects of Place-Based Policy: Evidence from the West-German Zonenrandgebiet

2018 ◽  
Vol 10 (4) ◽  
pp. 344-374 ◽  
Author(s):  
Maximilian v. Ehrlich ◽  
Tobias Seidel
Keyword(s):  
Economic Activity ◽  
Local Governments ◽  
Natural Experiment ◽  
Public Investment ◽  
Spatial Regression ◽  
Regression Discontinuity Design ◽  
Tax Base ◽  
Agglomeration Externalities ◽  
Land Rents ◽  
Economic Density

Using a natural experiment, we show that temporary place-based subsidies generate persistent effects on economic density. The spatial regression discontinuity design controls for continuous local agglomeration externalities, so we attribute an important role to capital formation in explaining persistent spatial patterns of economic activity. This persistence is driven by higher local public investment levels, which local governments could maintain after the end of the program because of a persistently higher tax base. We also find evidence for significant local relocation of economic activity, which raises doubts that the net effect of the policy is positive. Finally, we show that transfers have capitalized in land rents such that pretreatment landowners have benefited from the program. (JEL H71, H76, O18, R11, R12, R51, R58)

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