Decline In Investment Research Articles

Are Stock Buybacks Crowding Out Real Investment? Empirical Evidence from U.S. Firms

We investigate the role of financialization in the decline of investment for U.S. non-financial firms from 1992 - 2017. We show that the tendency to maximize shareholder value, fuelled by stock-based manager compensation, has led U.S. firms to divert resources from real investment to share repurchases to increase stock prices. Using micro-data from U.S. firms balance sheets and manager compensation, we estimate two dynamic panel data models: (i) to analyze the effects of share repurchases on capital investment; (ii) to examine the interaction between stock-based CEO pay and the likelihood of share repurchases. We find that stock buybacks have a negative effect on capital investment with this effect being stronger among large firms, operating in non-competitive markets. Moreover, an increase in stock options make firms more likely to repurchase shares. Our findings suggest that stock-based compensation creates incentives for managers to focus on increasing shareholder value by repurchasing shares at the cost of declining real investment and long-run growth.

Investment and Technical Progress in the G7 Countries and Australia

The vintage model of capital accumulation predicts that technical progress depends on the installation of new capital equipment. In this paper it is found that investment raises labor productivity in the G7 countries and Australia. This finding implies that the decline in investment during the global financial crisis will have a long lasting detrimental effect on labor productivity and hence wages.

Public investment and inclusive growth in Africa

PurposeThe increasing debate on the viability of broad-based productive employment in stimulating the participatory tendencies of growth makes it instructive to inquire how the African “Big Five” have fared in their quests to ensure growth inclusiveness through public investment-led fiscal policy.Design/methodology/approachTime varying structures and nonlinearities in the government investment series are captured through the non-linear autoregressive distributed lag, asymmetric impulse responses and variance decomposition estimation techniques.FindingsStudy findings show that positive investment shocks stimulate growth inclusiveness by enabling access to opportunities through job creation and productive employment for the populace; this result is evident for Morocco and Algeria. However, there is a non-negligible evidence that shocks due to decline in the government investment manifest in insufficient capital stocks and limited investment opportunities, impede access to opportunities by the populace, hinder labour employability and make growth less inclusive. Furthermore, all short-run findings corroborate long-run results regarding the reaction of inclusive growth to positive investment shocks with the exclusion of South Africa; which, unlike its long-run finding, shows that shocks due to increases in investment can foster growth inclusiveness. Also, in respect to short-run negative investment shocks, Nigeria is the only country that does not align its long-run findings.Practical implicationsThat public investment shocks make or mar inclusive growth effectiveness shows the need for appropriate fiscal policy consolidation and automatic stabilization guidelines to ensure buffers against shocks and to enhance government investment generation efficiency for a sustainable inclusive growth process that is more participatory in Africa.Originality/valueThis study is the first to accommodate possibilities of shocks in the inclusivity of growth analysis for the five biggest African economies which jointly account for over half of the recorded growth in the continent. As such, there is quantitative evidence that government investment is a potent determinant of growth inclusiveness and it is susceptible to structural changes and time variation of shocks.

Revisiting interest rate and lending channels of monetary policy transmission in the light of theoretical prescriptions

Although theories on channels of monetary policy transmission emphasize indirect monetary policy effect on inflation and output, empirical literature is surprisingly rooted in a direct approach. The use of variants of vector autoregression, with theoretical ordering of variables, does not only fail to quantify the indirect effect, but are also fraught with disagreements on identification of shocks of monetary policy. We revisit the interest rate and lending channels of monetary policy transmission in an approach that is grounded in theory and elicits step-by-step transmission of monetary policy impulses and the eventual effect on inflation in South Africa. We find interest rate and lending channels to be operative in South Africa. For the interest rate channel, a percentage restriction in monetary policy increases lending rate by 0.29%; a percentage increase in the lending rate reduces investment by 0.063%; and a percentage fall in investment reduces inflation by 0.074%. For the lending channel, a percentage restriction of monetary policy reduces banking sector credit by 0.22%; a percentage fall in private sector credit reduces investment by 0.20%; and a percentage decline in investment reduces inflation by 0.086%. These results are robust to different samples and specifications.

China-U. S. A Trade Friction on Bilateral Trade

This study is typically descriptive in nature that has been analyses through different componential data of the Chinse and U.S.A economy about the bilateral trade issues. The objective of the paper is to analyze and find the friction areas of Chinese and USA trade and implications. U.S.A-China change friction is dampening the Chinese financial system, particularly through a decline in the call for. Over the medium to a long time, the alternate row should depress China's capability economic growth price via supply-aspect elements., the united states are strengthening regulations on acquisitions of U.S. excessive-tech companies by means of Chinese businesses. This, mixed with strengthened capital manage in China, has brought about a steep decline in Chinese direct investments inside America, from 46 billion bucks in 2016 to 29 billion dollars in 2017 and to 4.8 billion dollars in appearing time will make it more and more tough for China to acquire technology and others from the U.S.A. China and America have discovered bilateral treaties and multilateral regulations which includes the WTO guidelines, economic and trade family members have grown deeper and wider. comparative strengths and the picks of the market, the two international locations have constructed up a jointly useful courting proposing structural synergy and convergence of interests., a few stages of change friction are handiest herbal. the key, however, lies in a way to beautify mutual trust, promote cooperation, and manage variations. principle of resolving disputes thru talk and session, and answering U.S issues with the best stage of staying power and true religion. It has triumphed over many problems and made giant efforts to stabilize China-US economic and change family members via preserving rounds of discussions with the facet of the united states and providing sensible solutions. however, the USA aspect has been contradicting itself and constantly hard in China. As a result, change and economic friction among the two aspects has escalated quick over a short period of time, causing critical damage to the economic and alternate family members that have developed over time thru the collective work of the two governments and the two peoples, and posing a grave risk to the multilateral buying and selling system and the principle of unfastened trade and economics. Keywords: Trade, Implications, Friction. Bilateral DOI: 10.7176/IAGS/86-02 Publication date: September 30 th 2020

The influence of the investment factor on the transformation of the global energy market

The object of the study is the transformation of the world energy market under the influence of investment. The study of the impact of investments on the transformation of the world energy market was carried out in terms of market, structural, and organizational parameters in the following areas:– the growing role of renewable sources in the world energy balance;– liberalization of sectoral energy markets;– wide application of information technologies, including the introduction of Smart Grid at various levels.The main disadvantages are the inability to analyze the transformation processes in all sectors of energy at the global level.Such general scientific and special methods as methods of analysis and synthesis, method of comparative analysis, graphic and statistical methods were used in the research.The paper shows that at the present stage the main prerequisite for investment has been the COVD-19 pandemic and pre-crisis expectations. This has led to a sharp decline in global investment in all energy sectors (both in aggregate energy supply and in end-use) and in research and development. In terms of industry, investments in oil and oil products (by all organizational forms of companies) and coal decreased the most. Investment in electricity and electricity networks exceeds investment in mining and processing of fossil fuels. The main factors holding back international investment in renewable energy are:– relatively lower economic and energy return on investment (EROI);– the high cost of connection to power systems;– local component requirements and other protectionist requirements;– discrediting by global oil and gas corporations about the danger of economic downturn and job cuts, etc.In the regional structure, the largest volumes of global investment are in the Asia-Pacific region, North America, and Europe.Insufficient investment in the accelerated transformation of the world energy market on the basis of sustainable development has been stated in all areas. The targeted efforts of both national governments and the international community are needed to ensure the desired transformation of the global energy market.

Studying Determinants of Foreign Direct Investment in Nigeria: An Empirical Investigation

This research paper investigated the determinants of foreign direct investment inflow into the Nigerian economy. This is because Nigeria at present is still characterized by low economic growth, which has created other macro-economic problems like inflation, low export, unemployment, unfavorable exchange rate, balance of payment disequilibrium, etc. The study adopted the Autoregressive Distributed Lag (ARDL/Bounds testing) econometric tool to examine the determinants of foreign direct investment (FDI) in the Nigerian economy. Data for the analysis are annual data covering the period 1981-2019, obtained from the Central Bank of Nigeria (CBN) Statistical Bulletin several issues. The study used inflation rate (INFR), interest rate (INTR), exchange rate (EXR) and trade openness (TOPN) as independent variables. While foreign Direct Investment (FDI) was used as the dependent variable. The result indicates that exchange rate (EXR) and trade openness (TOPN) are all positive determinants of FDI in the Nigerian economy as their corresponding coefficients are positive. The result further shows that for the Nigerian economy to attract FDI significantly by one percent, exchange rate and trade openness will increase by 0.18 and 5.00 percent respectively. On the other hand, inflation rate (INFR), and interest rate (INTR) are negative determinants of foreign direct investment in Nigeria. Meaning that, an attempt to increase either of these variables would result to a decline in foreign direct investment in the country and vice versa. We therefore conclude that both EXR and TOPN had a positive and significant impact on the FDI inflow to the Nigerian economy, and are therefore adjudged positive determinants of FDI inflow into the Nigerian economy within the period 1981-2019. INFR and INTR on the other hand maintained their negative influence on FDI inflow to the Nigerian Economy, hence, are negative determinants of FDI inflow into the Nigerian economy within the period 1981-2019. Finally, we recommend that government should sustain its drive for import substitutions which will encourage export, expand its bilateral trade ties with developed economies so as to woo FDI inflows. Also, government through it monetary authorities should reduce inflation and interest rates. This will help to woo FDI inflow into the Nigerian economy.

Sustainable Agricultural Growth for Rural Development in Asia: A Review*

AbstractThe current world population of 7.6 billion is expected to reach 8.6 billion in 2030 and 9.8 billion in 2050. Most of the addition will be in developing countries, and the exponential growth in population would require doubling the current food production.This paper discusses several strategies developed to cope with sustainable agricultural growth for rural development in Asia. In Korea, despite the decline in investment in food production in recent times, continuous interventions from the government are critical because agricultural water use is essential for the improvement of rural living standards. Thailand shifted its rural development from a growth‐oriented approach to a new model of holistic people‐centred and sustainable development. Japan emphasized the importance of multi‐functionality to be taken into account to evaluate water use for agriculture in Asia. Indonesia accepted challenges based on the current roles of irrigation development in food security and poverty eradication. Turkey flagged its group agricultural practices (GAPs), a south‐eastern Anatolia project, to showcase its multi‐sector and integrated regional development approach in the context of sustainable development.To cope with food insecurity, it is necessary to find effective ways to use agricultural water for production and environmental services at the same time for sustainable rural development.

Why Did the Investment–Cash Flow Sensitivity Decline over Time?

AbstractWe propose an explanation for why corporate investment used to be sensitive to cash flow and why the sensitivity declined over time. The sensitivity stems from the informational role of cash flow in inferring the productivity of tangible capital in the old economy. Over time, however, more new-economy firms enter the market. These firms have reduced tangible capital productivity and reduced cash-flow predictability, which drives the decline in the average investment–cash flow sensitivity. Theoretical and empirical analyses support this explanation.

Assessment of capital expenditure in achieving sanitation-related MDG targets and the uncertainties of the SDG targets in Algeria

This paper studies sanitation policy in Algeria by conducting an assessment of the capital expenditure on sanitation improvements between 2000 and 2018. It focuses on the period of implementation of the Millennium Development Goals (MDGs) between 2000 and 2015 and the first years of the Sustainable Development Goals (SDGs) from 2016 to 2018. The paper aims also to assess the level of subsidies for sanitation services in Algeria and the lack of full cost recovery. We then emphasise the idle capacity for wastewater treatment plants (WWTPs) and the risks of wastewater discharge on public health and ecological integrity. Our methodological approach is multidimensional and based on a critical reading of reports by institutions responsible for the implementation of sanitation policy. We used water and sanitation data from the water authorities to evaluate the funding of the sanitation subsector and to analyse the strengths and weaknesses of this sub-sector. This study was also facilitated by semi-structured interviews with executive staff in water institutions responsible for the implementation of sanitation policy in Algeria. In the period studied (2000–2018) we find that the sanitation subsector benefited from a significant investment budget (or budgetary allocations) of nearly US$7.58 billion (in constant 1999 US$), representing 20.53% of the total budget allocated to the water sector. However, the low absorption capacity, estimated at 62.7% between 2000 and 2015, meant that the capital expenditure of achieving MDG target 7.C related to sanitation was US$4.38 billion (in constant 1999 US$) out of US$6.98 billion allocated for the same period. The study shows that the decline in real investment since 2009, with a funding gap that increased from 201.49% in 2015 to 385.56% in 2018, casts uncertainty on the fulfillment of SDG targets 6.2 and 6.3 related to sanitation. It is thus very difficult to meet the level of investment planned for 2030. It seems, therefore, that the SDGs will only be comfortably achieved if reforms towards the sustainable recovery of sanitation service costs are undertaken.

Assessing the Effects of Anti-corruption Law on Entrepreneurial Finance: Evidence from Latin America

Corruption normally causes distrust among investors and can negatively affect investments. Particularly in Latin America, decline of investments is one of the most significant problems. In such a context, anti-corruption laws can both fight corruption and promote business, restoring investors’ trust. In this article, we ask whether the introduction of an anti-corruption framework affecting both the public and private spheres is able to increase investors’ confidence in a new form of investment, that is, equity crowdfunding. By using a unique database, with combined information from different platforms in Brazil, Chile and Mexico, we study the population of 492 projects between 2013 and 2017. Implementing a set of linear probability regressions, we find that the new Mexican anti-corruption law has increased the probability of success of equity crowdfunding projects in this country, compared to Brazilian and Chilean projects, suggesting the existence of a causal relation between anti-corruption rules and investments in a highly perceived corrupt environment further characterised by a low level of investor protection.JEL Classification: G23, G28, K22, L26

Corporate Investment in India: Recent Trends and Patterns

This paper examines the trends and patterns in the corporate investment at the aggregate, sectoral and sub-sector level for the period 2011-12 to 2016-18. Using the real Gross Fixed Capital Formation (GFCF) as the measure of investment, the study finds that there has been a significant decline in the investment by the household sector, which suggests that the informal sector is one of the major contributors to the decline in investment in the post-crisis period. Further, there has been significant decline in the growth of corporate investment in recent years which has contributed to a severe economic slowdown in India. Though, the share of the service sector in corporate investment has increased significantly in the recent years, it is the major contributor for the decline in investment in the recent years followed by construction and mining & quarrying. Lastly, the investment in tangible assets constitutes the bulk of the total corporate investment, and the investment in intangibles is insignificant. This indicates that the corporate investment in Research and Development (R&D) is limited in India.

Examining the differential impact of monetary policy in India: a policy simulation approach

PurposeThough an accumulating body of study has analysed monetary policy transmission in India, there are few studies examining the differential impact of monetary policy action. Against this backdrop, this study aims to analyse the differential impact of monetary policy on aggregate demand, aggregate supply and their components along with the general price level in India.Design/methodology/approachThe study develops a structural macroeconometric model, which is primarily aggregate and eclectic in nature. The generalized method of movements is used for estimation of behavioural equations, while a Gauss–Seidel algorithm is used for model simulation purposes.FindingsThe paper presents the results of two policy simulations from the estimated model that highlight the differential impact of monetary policy. The first one, hike in the policy rate by 5% and second is a reduction in bank credit to the commercial sector by 10%. The results from the first policy simulation experiment reveal that interest hike has a significant negative impact on aggregate demand, aggregate supply and general price level. However, the maximum impact is borne by investment demand and imports followed by private consumption. While as among the components of aggregate supply maximum impact is born by infrastructure output followed by the manufacturing and services sector with the agriculture sector found to be insensitive in nature. The results from the second policy simulation experiment revealed that pure monetary shocks have a significant negative impact on aggregate demand, aggregate supply and general price level. However, the maximum impact is born by private consumption and imports followed by investment demand. While as among components of aggregate supply maximum impact is borne by infrastructure followed by the manufacturing and services sector with the agriculture sector found to be insensitive in nature. From both policy simulation experiments, the study highlighted the relative importance of the income absorption approach as opposed to the expenditure switching effect.Practical implicationsThe results obtained in this study provides a strong framework for design the monetary policy framework. The results are in a view of the differential impact of monetary policy action among the components of both aggregate demand and aggregate supply. This reflection of differential impact has immense significance for the macroeconomic stabilization as the central bank will have to weigh the varying repercussion of its actions on different sectors. For instance, the decline in output after monetary tightening might be conceived as mild from an overall perspective, but it can be appreciable for some sectors. This differential influence will have an implication for policy design to care for distributional aspects, which otherwise could be neglected/disregarded. Similarly, the output decline may be as a result of either consumption postponement or a temporary slowdown in investment. However, the one emanating due to investment decline will have lasting growth implications compared to a decline in consumer demand. In addition, the relative strength of expenditure changing or expenditure switching policies of trade balance stabilization may have varying consequences in the aftermath of monetary policy shock. Accordingly information on the relative sensitiveness/insensitiveness of different sectors/ components of aggregate demand towards monetary policy actions furnish valuable insights to monetary authorities in framing appropriate policy.Originality/valueThe work carried out in the present paper is motivated by the fact that although a number of studies have examined the monetary transmission mechanism in India, a very few studies examining the differential impact of monetary policy action. However, to the best of the knowledge, there is no such studies, which have examined the differential impact of monetary policy in the structural macro-econometric framework. The paper will enrich the existing literature by providing a detailed account of the differential impact of monetary policy among the components of both aggregate demand and aggregate supply in response to an interest rate hike, as well as a decrease in the money supply.

CRISPR-Cas Systems: A Review of their Role as Non-Canonical Antimicrobials to Combat Drug Resistance

Background: Since their discovery in 1928, antibiotics have revolutionized modern human medicine. A direct consequence of their widespread use and abuse is the concomitant development of sophisticated resistance mechanisms by microbes to most of these antibiotic agents. With a sharp fall in the number of new antibiotic agents under development, due to a decline in sectoral investment by the major pharmaceutical firms, now more than ever, there is an urgent need for alternative antimicrobial agents, to overcome the global health crisis of antimicrobial resistance. One such alternative are the CRISPR-Cas systems. In this review, we discuss the discovery and evolution of the CRSIPR-Cas system, their classification, their application as antimicrobial agents and the current limitations to their use.
 Main Body: Since their discovery in 1987, the CRISPR-Cas systems have evolved to possess several applications in biomedical science, including their use in gene editing, genome engineering and for treating genetic diseases. One potential application that has received less attention however is their use as sequence-specific antimicrobials. The three steps in their mechanism of action – spacer acquisition, biogenesis and interference, have been demonstrated to be effective for the highly-specific elimination of targeted bacterial strains from a mixed population of bacteria in a microbial community, as well as for driving a positive selection pressure for the development of antibiotic-sensitive bacterial strains, even to the point of reversing antimicrobial resistance through the elimination of the resistance genes. However, the use of CRISPR-based antimicrobials is fraught with several challenges, ranging from concerns about delivery platforms (phage-based vs. conjugative plasmids), their application on complex microbial communities, safety considerations, to the possibility of resistance and the many regulatory hurdles against their widespread use.
 Conclusion: While their efficacy has been confirmed, more studies are required to further establish CRISPR-Cas based antimicrobials in conventional medical practice.

ON THE QUESTION OF PRACTICAL APPLICATION OF METHODS AND MECHANISMS FOR FORMATION OF REGIONAL INNOVATIVE DEVELOPMENT STRATEGIES

It is possible to notice a recent slowdown in the rates of social and economic development in many regions of the country. This trend depends on many aspects: exhaustion of natural and raw materials, inadequate financing of re-equipment projects, utilization of outdated technologies and equipment in the production regional subsystem. As a consequence, there are: loss of competitiveness of the territory, a decline in investment, and a reduction of the living standards of the population. The key factor in creating an innovative breakthrough in the economy of the region is the concentration of resources and the creation of spatially-expressed territorial zones of outstripping economic growth with a narrow branch of specialization (“Growth Points”). Herewith, recently in Russia a significant gap has been revealed between the formed innovative intellectual products and the process of their commercialization. There is an obvious need for changes in the system of transfer of innovations and new technologies, which must have a stable effect of adaptive synergism. In the global and domestic practices, there are different methods to correctly assess (to a greater or lesser extent) the level of competitiveness of individual regions from the perspective of their innovative development. In the paper the authors analyze the methods and mechanisms of forming the stages of the implementation of the regional innovative development strategy presented in specialized literature and based on the results of assessing the level of competitiveness of the region by the criterion of the “level of innovative development”.

The Impact of HIV/AIDS on Human Capital Investment in Sub-Saharan Africa: New Evidence

The risk of AIDS-related mortality increased dramatically throughout the 1990s. This paper updates previous work by Fortson (2011) to examine the impact of mortality risk on human capital investment during the deadliest period of the pandemic. We combine Demographic Health Survey data from 30 countries, across 60 survey waves, to generate a sample of over 1,300,000 observations. Cohort-specific analysis using the updated sample yields new evidence that the negative relationship between HIV prevalence and schooling steepened as mortality risk increased. The reduction in schooling is largest for women, and along the extensive margin of the schooling decision. The findings indicate that the decline in human capital investment associated with the HIV/AIDS pandemic prior to the availability of treatment was larger in magnitude than previously understood, but may be reversing rapidly as access to treatment is expanded.

An Application of Causal Forest in Corporate Finance: How Does Financing Affect Investment?

Answering a causal question with results extendable outside of a narrow sample is challenging. Regression discontinuity design (RDD) provides causal results with strong internal, but weak external, validity. We introduce a novel machine learning technique, causal forest, into the corporate finance literature because it has several benefits over RDD, including greater precision and extendibility of results. We revisit a well-known RDD setting in corporate finance, debt covenant violations. We show that this RDD framework recovers an overly-large treatment effect of default on investment because firms can manipulate the accounting ratios lenders use to define default thresholds. In contrast to previous literature that shows an economically significant decline in investment following a technical default, we find, on average, no change in investment. Intuitively, this result makes sense because firms that can manipulate their default status will only choose to default if there are no consequences to default. For these firms, which comprise the majority of our sample, the treatment effect of default on investment will be zero. We show that causal forest's ability to recover heterogeneous treatment effects is key to reconciling disparate findings in the debt covenant literature. Causal forest can be a broadly useful empirical technique for answering causal questions.

Mind the Contagion, Your Honour

Although court judgments on economic issues are frequent, their impact remains understudied. Unlike laws, studied extensively by law and finance literature, they are not publicly debated, not passed by legislators, and do not always factor in economic implications. Studying an unexpected verdict of the Indian Supreme Court that retrospectively canceled the allocation of coal blocks, we find evidence of contagion through what we call a litigation channel: firms unconnected with the judgment but facing litigation experience a credit supply shock and a decline in investments. The shock is distinct from the known bank lending channel and has significant macro-economic consequences.

An economic analysis of malaria elimination program in Nepal

BackgroundGovernments have committed to eliminate malaria. But a decline in government investment in malaria interventions, particularly in developing countries such as Nepal, reveals a limited emphasis on malaria elimination that may be due to lack of strong evidence on benefits of the investment. This paper empirically analyses curative and preventive costs and benefits of Nepal's malaria elimination program from the perspectives of both service providers in the public sector and people who are at risk. MethodsCost benefit analysis of both curative and preventive interventions for malaria elimination was conducted using case and non-case household survey data. Secondary data were obtained from government sources. Ingredient approach and step-down methods were used to estimate costs of malaria elimination interventions, and willingness to pay (WTP) method and case averted approach to estimate benefits. ResultsCurative intervention of malaria elimination program is economically viable in Nepal with a net present value (NPV) of USD 23 million, benefit cost ratio (BCR) of 1.58 and internal rate of return of 63%. Malaria preventive intervention is highly beneficial with NPV of USD 435 million and BCR of 2.13. An annual investment of USD 36.59 million is required to continue the current pattern of malaria reduction that can generate societal benefits of USD 92.81 million. From this investment, the government can save USD 132 million by the end of 2025. The maximum WTP of case households for the intervention is USD 57 per household which is 63% higher than that of non-case households. ConclusionMalaria elimination program in Nepal is economically viable and investment worthy. As the preventive intervention generates much higher net benefits than the curative intervention, the government should emphasize on preventive intervention while continuing the curative interventions.

Investment Sensitivity to Idiosyncratic Credit Term Shocks

We investigate how idiosyncratic lender shocks impact corporate investment. Lenders with recent default experience write stricter loan contracts, leading to a reduction in real investment for borrowing firms. The decline in investment is not attributable to loan riskiness, borrower's agency costs, the lender-borrower relationship nexus, lender capitalization, or to borrower interest rate sensitivity, but is more pronounced when the lender faces higher incentives to learn. The evidence suggests that defaults inform lenders about investment opportunities and their screening ability, and adjustments to this information have real economic consequences.