Real Exchange Rate Uncertainty and Private Investment in Developing Countries

Real Exchange Rate Uncertainty and Private Investment in Developing Countries
Author: Luis Servén
Publisher: World Bank Publications
Total Pages: 24
Release: 2002
Genre: Capital stock
ISBN:

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Serven examines empirically the link between real exchange rate uncertainty and private investment in developing countries using a large cross country-time series data set. He builds a GARCH-based measure of real exchange rate volatility and finds that it has a strong negative impact on investment, after controlling for other standard investment determinants and taking into account their potential endogeneity. The impact of uncertainty is not uniform, however. There is some evidence of threshold effects, so that uncertainty only matters when it exceeds some critical level. In addition, the negative impact of real exchange rate uncertainty on investment is significantly larger in economies that are highly open and in those with less developed financial systems.

Reviving Private Investment in Developing Countries

Reviving Private Investment in Developing Countries
Author: A. Chhibber
Publisher: Elsevier
Total Pages: 256
Release: 2013-10-22
Genre: Business & Economics
ISBN: 1483291340

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The aim of the research described in this volume is to examine the behavior of private domestic investment in a sample of seven developing economies: Chile, Colombia, Egypt, Indonesia, Morocco, Turkey, and Zimbabwe. The studies represent a first step toward understanding the investment process in developing countries and the scope for government policy to affect private capital formation. Such issues will become increasingly important in the future as more developing countries try to encourage private investment. Four key issues emerge in the analysis of the determinants of private investment and its role in adjustment programs in developing countries. The first is the impact of changes in the exchange rate; the second major concern is the existence of crowding out of private activity as a result of government borrowing in domestic financial markets through interest rates or quantity rationing. A third and related issue is whether government spending, particularly that on investment, "crowds in" or "crowds out" private capital formation. Fourth, the effects of uncertainty are important in determining the response of private agents to changes in the incentive structure.

Economic Security, Private Investment, and Growth in Developing Countries

Economic Security, Private Investment, and Growth in Developing Countries
Author: Ms.Helene Poirson Ward
Publisher: International Monetary Fund
Total Pages: 32
Release: 1998-01-01
Genre: Business & Economics
ISBN: 1451842015

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This paper provides empirical support for the view that enhanced economic security fosters private investment and growth in developing countries. An analysis for 53 developing countries suggests that most aspects of economic security have improved since the mid-1980s; that private investment is mostly influenced by the risk of expropriation, the degree of civil liberty, and the degree of independence of the bureaucracy; and that economic growth is affected by the risk of expropriation and political terrorism in the short run, and by corruption and contract repudiation in the long run.

Private Enterprise in Developing Countries

Private Enterprise in Developing Countries
Author: W. M. Clarke
Publisher: Elsevier
Total Pages: 77
Release: 2013-10-22
Genre: Business & Economics
ISBN: 1483227030

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Private Enterprise in Developing Countries is a five-chapter text that describes the contribution of private investment in the less-developed countries. The opening chapter tracks down the flow of help to less development countries and the struggles in encouraging private enterprise to invest in the poorer countries. The next chapter scrutinizes the significant changes in private investments in less-developed countries, followed by a discussion on the distinction between the prime purpose of private enterprise and the result of their activities, focusing on the concept of the so-called development “fall-out . These topics are followed by surveys of the basis of fear of private investors in investing business in underdeveloped countries through examining the experience of Malaysia and the sterling parts of Africa. The final chapter considers some business issues, including the development of a system to safeguard the handling of information for the study of overseas investment climate and the role being played by indigenous development corporations.

Fiscal Policy and Private Investment in Developing Countries

Fiscal Policy and Private Investment in Developing Countries
Author: Ajay Chhibber
Publisher: World Bank Publications
Total Pages: 48
Release: 1990
Genre: Finance, Public
ISBN:

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The key to sustained recovery in developing countries is the revival of private investment. This revival requires a coordinated set of credible policies - fiscal, exchange rate, tax, and public expenditure restructuring. In several countries the debt overhang is also an obstacle to achieving that credibility.

Irreversibility and Private Investment Decisions Under Uncertainty

Irreversibility and Private Investment Decisions Under Uncertainty
Author: Benjamin Ayodele Folorunso
Publisher: LAP Lambert Academic Publishing
Total Pages: 140
Release: 2012-03
Genre:
ISBN: 9783845473871

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Developing countries are in dire need of sustainable economic growth and theoretical literature suggests the resurgence of private investment as a panacea for rapid economic growth. This calls for the examination of the determinants of private investment in the literature. Recent works have, however, indicated that the lost option value of investment and effect of uncertainty can be large but empirical literature on this issue is scanty in developing countries. The book, thus, examines private investment decisions in Nigeria and provides improved understanding and more dynamic framework for private investment decisions in the wake of irreversibility and uncertainty. The book concludes that high levels of uncertainty indicators cause private investment to decline while irreversibility affects the timing of private investment spending in the short run and makes private investors less eager to invest thus impacting negative effect on investment spending. The book is relevant to academia in the context of policy discussion on the causes of Africa's dismal growth performance and offers important guidelines for designing more effective policies as regards private investment decisions.

Does Price Uncertainty Really Reduce Private Investment?

Does Price Uncertainty Really Reduce Private Investment?
Author: Anita George
Publisher:
Total Pages: 24
Release: 1993
Genre: Capital investments
ISBN:

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Uncertainty about the cost of capital should be compared with uncertainty about the price of output. The efficiency of policies to reduce the price of capital may be enhanced if the volatility of the output price is greater than the volatility of the price of capital, and if there is a positive correlation between changes in prices for output and capital.

Private Investment in Developing Countries

Private Investment in Developing Countries
Author: International Monetary Fund
Publisher: International Monetary Fund
Total Pages: 30
Release: 1990-04-01
Genre: Business & Economics
ISBN: 1451977026

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This paper analyzes the effects of several policy and other macro-economic variables on the ratio of private investment to GDP in developing countries. Using data for a sample of 23 developing countries over the period 1975-87, the econometric evidence indicates that the rate of private investment is positively related to the real growth rate of GDP, public sector investment, and to a lesser extent the level of per capita GDP, while it is negatively related to domestic inflation, the debt service ratio, the debt-to-GDP ratio, and high real interest rates. There is also some indication that all but the last of these variables had a greater impact before the onset of the debt crisis in 1982, while the debt-to-GDP ratio (a measure of a country’s debt overhang) has become more important since then.