CHAPTER 3: WEAK INVESTMENT IN UNCERTAIN TIMES: Causes, Implications, and Policy Responses

• Autores: Anonymus Anonymus
• Localización: Global economic prospects and the developing countries, ISSN 1014-8906, Nº 14, 2017, págs. 193-243
• Idioma: inglés
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• Resumen

  • Investment growth in emerging market and developing economies (EMDEs) has slowed sharply since 2010.

    This deceleration has been most pronounced in the largest emerging markets and commodity-exporting EMDEs, but has now spread to the majority of these economies: investment growth is below its long-term average in the most EMDEs over the past quarter century except during serious global downturns. These economies account for more than one-third of global GDP and about three-quarters of the world’s population and the world’s poor.

    While slowing investment growth is partly a correction from high pre-crisis growth rates in some EMDEs, it also reflects a range of obstacles holding back investment: terms-of-trade shocks (for oil exporters), slowing foreign direct investment inflows (for commodity importers), as well as private debt burdens and political risk (for all EMDEs). Weak investment is a significant challenge for EMDEs in light of their sizable investment needs to make room for expanding economic activity, to accommodate rapid urbanization, and to achieve sustainable development goals. Sluggish investment also sets back future growth prospects by slowing the accumulation of capital and productivity growth. Although policy priorities depend on country circumstances, including the availability of policy space and economic slack, policymakers should be ready to employ the full range of cyclical and structural policies to accelerate investment growth