Increase Private Investment Research Articles

The Discovery of New Export Products in Ecuador

This paper examines export diversification in Ecuador in the cases of fresh cut flowers, canned tuna, palm heart, broccoli and mangoes, using the theoretical framework on pioneers and discoveries developed by Hausmann and Rodrik (2003), as well as work by Sanchez and Butler (2006) on export costs and related uncertainties. It is found that the discoveries were mainly of traditional competitive advantage, with various degrees of technology adoption. The following policy implications are derived: i) innovative mechanisms to share the costs of new discoveries must be found and intellectual property rights strengthened; ii) cooperation among industry experts needs to improve; iii) deeper collective action to promote public-private partnerships should be undertaken; iv) relevant information and knowledge should be made available to all interested parties; and v) a national-level agenda should be undertaken to increase private investment in promising sectors while promoting the creation of public goods and minimizing rent-seeking behavior.

Legal Analysis of the Regulatory Reforms Bill, 2010

The regulatory reforms bill is a cohesive piece of legislation which caters a structure which will simplify the existing regulation process and encourage the infrastructure development in our country. With ever increasing private investment in infrastructure and logistics of our country, it is important to establish a permanent level playing field for all the public as well as private players by removing all the barriers to a healthy competition. Identification and regulation of monopolistic segments needs to be set-up so that non discriminatory consumer service is guaranteed. A refurbishing of our tariff system is necessary for a de-politicised and market-isolated price fixing.

Tax Increment Finance Investment Impacts on Localized Real Estate: Evidence from Chicago’s Multifamily Markets

Indices for the Chicago multifamily real estate market are developed in order to examine the relationship between real property appreciation rates and proximity to a designated tax increment financing (TIF) district. Chicago is a community with a long history of TIF investment and a patchwork of more than 100 established TIF districts, comprising over 25 percent of the city’s total acreage and approximately 13.5 percent of the total tax base. Municipal governments across the country have come under increased pressure to provide quantifiable evidence that the tools they employ in the name of economic development have the potential to increase private investment. The central hypotheses assert that properties located within a designated TIF district will exhibit higher rates of appreciation after the area is designated a qualifying TIF district when compared to those properties selling outside TIF districts, and when compared to properties that sell within TIF district boundaries prior to designation.

Ecosystem services from agriculture: Steps for expanding markets

Farmers in the United States produce a wide variety of commodities for food and fiber. Farmers can also produce a variety of non-commodity ecosystem services for which markets do not exist or are imperfectly formed. Such services may be valued by society, but due to their nature or institutional arrangements, farmers often do not receive a price signal for them. This results in inefficient allocations of resources, in that farmers under-produce non-commodity ecosystem services. One possible way to increase private investment in ecosystem services is to create a market for them. We draw lessons from six different markets for providing ecosystem services from farms (water quality trading, wetland mitigation, carbon cap-and-trade, over-the-counter carbon, eco-labeling, and fee hunting) on what is required for a market to function, and the problems these markets might face.

How to Increase Efficiency of Economic Policy: Empirical Analysis of Government Institutions Role

The paper analyzes the hypothesis of statistical significance of the institutional factor in the process of increasing the efficiency of economic policy in developing countries. It shows that expansion of domestic credits to private sector (aimed at increasing private investment activity including FDI) may bring about contrary results if corruption in the country is higher than the threshold level. The efficiency of anti-inflation policy in many respects depends on the quality of banking system: the higher it is the lower is the impact of money supply on inflation and vice versa. The main reserves of increasing efficiency of anti-inflation policy in the CIS countries are strengthening of banking potential and energy saving. The priority of institutions development measures as compared to selective measures of government support of separate sectors of economy is justified.

Using exploration expenditures to assess the climate for mineral investment

Countries that rely on private investors to find and exploit their mineral resources need reliable indicators of their investment attractiveness. This study explores the use of exploration expenditures for this purpose, focusing primarily on Chile. It finds that exploration expenditures can provide useful insights into both the level and trends in investment attractiveness for individual mineral producing countries. However, for various reasons, it is a country's share of grassroots exploration expenditures for specific metals, rather than its share of total world exploration, that most directly and immediately reflects investment climate. Over the current decade, Chile's shares of world grassroots exploration for gold and (more recently and more modestly) for base metals have fallen, suggesting a deterioration in the country's investment climate for these mineral commodities. The declines, however, are less dramatic than the country's falling share of total world exploration suggests. The study concludes by briefly examining the levels and trends in investment climate for the more important mining countries. Among other trends it finds that Canada and Australia continue to enjoy a high level of attractiveness despite the efforts of many developing countries in recent years to increase private investment in their mineral sectors.

The Use of Markets to Increase Private Investment in Environmental Stewardship

U.S. farmers and ranchers produce a wide variety of commodities for food, fuel, and fiber in response to market signals. Farms also contain significant amounts of natural resources that can provide a host of environmental services, including cleaner air and water, flood control, and improved wildlife habitat. Environmental services are often valued by society, but because they are a public good—that is, people can obtain them without paying for them—farmers and ranchers may not benefit financially from producing them. As a result, farmers and ranchers under-provide these services. This report explores the use of market mechanisms, such as emissions trading and eco-labels, to increase private investment in environmental stewardship. Such investments could complement or even replace public investments in traditional conservation programs. The report also defines roles for government in the creation and function of markets for environmental services.

Learning By Investing: Embodied Technology and Business Cycles

In the last decade of the 20th century, the U.S. economy witnessed a persistent and substantial increase in private investment. The boom was sharply reversed in 2001, and a great deal of evidence suggests that the capital stock had become excessive. Standard equilibrium business cycle models have difficulties in predicting the investment boom and overshooting. An embodied technology model is constructed to replicate the pattern of investment boom and collapse. Unlike previous models of embodiment, the present model assumes that new technology increases the productivity of capital of all vintages, but only new capital can facilitate the adoption of the new technology. Further, although agents in this model know about the advent of a new technology, they have imperfect information about its magnitude. Agents learn the magnitude by investing in new capital. I present a sufficient condition for having a persistent investment boom and overshooting. I also solve the model numerically in a dynamic general equilibrium (DGE) setup. The model presented in this paper extends the standard DGE business cycle models in two ways: First, it presents a strong internal propagation mechanism with respect to technology shocks; second, it generates endogenous recessions without invoking technological regress. The model also offers a possible explanation on why consumption growth was strong during the last recession.

Learning by Investing: Embodied Technology and Business Cycles

In the last decade of the 20th century, the U.S. economy witnessed a persistent and substantial increase in private investment. The boom was sharply reversed in 2001, and a great deal of evidence suggests that the capital stock had become excessive. Standard equilibrium business cycle models have difficulties in predicting the investment boom and overshooting. An embodied technology model is constructed to replicate the pattern of investment boom and collapse. Unlike previous models of embodiment, the present model assumes that new technology increases the productivity of capital of all vintages, but only new capital can facilitate the adoption of the new technology. Further, although agents in this model know about the advent of a new technology, they have imperfect information about its magnitude. Agents learn the magnitude by investing in new capital. I present a sufficient condition for having a persistent investment boom and overshooting. I also solve the model numerically in a dynamic general equilibrium (DGE) setup. The model presented in this paper extends the standard DGE business cycle models in two ways: First, it presents a strong internal propagation mechanism with respect to technology shocks; second, it generates endogenous recessions without invoking technological regress. The model also offers a possible explanation on why consumption growth was strong during the last recession.

Energy Resources: A Blessing or a Curse?

The Debate Is having natural gas and oil (GO) a blessing or a curse? Mexico plays an important role as trading partner in energy with the U.S. and Canada. Mexico's energy potential is underutilized. The purpose of my research during the past four years has been to build an econometric model that links GO drilling with reserves and production, and use it to perform simulations in order to design public policy guidelines. The model is relatively simple and theoretically well-founded. Simulations were performed which support the hypothesis that GO are critical to the achievement of sustainable development. Policy errors explain the failure to provide investment in capacity required to meet the world's growing demand for GO. Mexico must either develop its GO domestic sources or increase imports. The Mexican Case serves as a useful counter to two recent theories that minimize the potential role of energy in sustainable development. The theory by Colin Campbell states that global GO supplies are near or past their peak, owed to the cumulative effects of resource exhaustion. The second, developed by Jeffrey Sachs ("The Resource Curse"), considers that GO offer no potential for useful contribution to sustainable development, but impede it by reducing the economic welfare of the host countries. The results of these four years of research efforts aim to influence the World Bank's decisions now under consideration for future funding to GO producing countries after 2008. The Econometric Analysis Mexico's energy resource potential is expected to be challenging. The recent stagnation of the Mexican energy sector is found to be attributable not to resource scarcity, but to insufficient government investment in new drilling activity. Achieving sustained growth in this environment will require significant cuts in government spending on other programs. The Mexican GO Supply Model enhances our understanding of the influence of energy in sustainable development(1). The model is relatively simple, theoretically wellfounded, and characterized by stable and robust parameters in line with comparable parameters estimated for other countries in the literature(2). This model provides the basis for the conclusions that it was lack of drilling effort, not resource scarcity, responsible for past reserve declines. This model brings hope and optimism for recovery based on recently expanded drilling budgets. PEMEX (Petroleos Mexicanos) is a company owned by the State; the only one that can produce GO by law. The simulations performed with the GO Supply Model reveal the potential for a recovery of supply based on a long-term cut in PEMEX's tax burden and the increase in private investment. The development and estimation of a detailed and integrated econometric GO Supply Model for Mexico is an effective tool for the design of public policy in Mexico. Moroney's model provides a description of three vertically integrated sectors: drilling, reserve additions, and production. "Modelling these three sectors individually is essential to understand GO supply, because ultimately, an increase in price can only lead to additional production through a process that begins with additional exploration and discovery, continues with an expansion of reserves, and finally results in additional production"(3).

Diversity and integration of science and technology policies

This paper discusses recent conceptual approaches to technical change, based on an emerging diversity of policies and increasing “institutional specialization” and clarification of the role of the private and public incentives to support S&T. This fact is reflected in the trend in developed economies towards increasing private investment in science and technology and we argue for the need to promote public policies in modern societies fostering competence building. This broad concept has motivated the work behind the present special issue, which was launched during the 6th International Conference on Technology Policy and Innovation (ICTPI), hold in Monterey, Mexico, in the summer of 2003. Under the broad designation of “Connecting People, Ideas, and Resources across Communities” the Conference brought together a range of experts to discuss technology, policy and management in a context much influenced by a dynamic of change and a necessary balance between the creation and diffusion of knowledge. Thus, this special issue includes a set of extended and revised contributions to the Monterey conference that are largely grounded on empirical experiences of different regional and national contexts. The aim of this introductory paper is to set the stage for these contributions, with an original contribution on possible views for emerging science and technology policies.

The impact of tax increment finance districts on localized real estate: Evidence from Chicago’s multifamily markets

Sales price indices for the Chicago multifamily real estate market are developed in order to examine the influence that designating an area a tax increment financing district (TIF) has on the real property appreciation rates. Chicago is a community with a long history of TIF investment and a patchwork of more than 130 established TIF districts, comprising over 29 percent of the city’s total acreage and approximately 19 percent of the total real property tax base. Municipal governments across the country have come under increased pressure to provide quantifiable evidence that the tools they employ in the name of economic development have the potential to increase private investment. The results indicate that properties located within a designated TIF district exhibit higher rates of appreciation after the area is designated a qualifying TIF district when compared to those properties selling outside TIF districts, and when compared to properties that sell within TIF district boundaries prior to designation. The findings provide support for the hypothesis that TIF policy impacts property values through increased investment.

Key Economic and Social Challenges for Latin America: Perspectives from Recent Studies

The paper draws on recent studies at the W odd Bank and elsewhere to highlight four aspects of Latin America's current challenges. First, high inequality, partly related to historical relations between Europeans, indigenous and Afro-descendants, but reinforced by continuing dualism between the formal and informal sectors. Second, education, where the region suffers from a serious "secondary deficit" and weak educational quality. Third, the business climate, which exhibits continuing problems with inappropriate regulation while infrastructure provision has suffered from cutbacks to public provision, only partly compensated for by increased private investment. Finally, Latin America's future sources of international comparative advantage: whether in natural resource-based exports or in manufacturing, the region needs to improve performance in mobilizing knowledge and technology.

The Effects of Public Investment on Private Investment in Developing Economies

The literature on the impact of public investment in developing economies gives inconsistent results on whether it complements or crowds out private investment. Applying several pooled specifications of a standard investment model to a panel of developing economies for 1980 to 1997, this study finds that public investment complements private investment, and that, on average, a 10 percent increase in public investment is associated with a 2 percent increase in private investment. The results also indicate that private investment is constrained by the availability of bank credit in developing economies. The same empirical models are run on a panel of developed economies. In contrast to developing economies, public investment crowds out private investment in developed economies. The results show that in a number of important ways, private investment in developed economies is influenced by different factors than private investment in developing economies.

Investment in Education and Redistributive Taxation without Precommitment

This paper compares private investment in risky education in a laissezfaire economy and with income redistribution. Obtaining higher education requires time and may require paying nondeductible resource costs. The paper shows that redistributive taxation may actually increase private investment in risky education also without precommitment.

Trends in Private Investments in Developing Countries and Perceived Obstacles to Doing Business

The first part of the discussion paper documents trends in private and public fixed investment. On average for the 47 countries covered (including, for the first time in this series, China), 1997 was a record year for private investment, which rose from a low of 11.2 percent of GDP in 1985 to 14.3 percent in 1997, the last year for which data exist. Public investment declined to 7.2 percent of GDP, its lowest level since 1975. The largest 1997 increases in private investment were in two transition countries where levels remain low (Bulgaria and Romania) followed by Panama, Cote d'Ivoire, Bolivia, Argentina and China. Ratios of private investment to GDP were highest in Papua New Guinea, Malaysia, the Republic of Korea, Thailand, and Indonesia, before the full effects of the Asian crisis were felt. The second part presents country-specific results of a 1996/97 worldwide survey of business executives. The discussion focuses on obstacles to doing business in each of the 74 countries covered (including industrial economies) and their relationship to levels of private investment. A few factors emerge as being of particular importance to private investment decisions: the real exchange rate, the rule of law, predictability of judiciary systems, and the extent to which financing is available to enterprises.

Solar electricity in Africa: a reality

This work is based on a random sample survey of 410 solar electricity systems in eight districts in Kenya. Actual technical performance and the perception of the users were analyzed with a view to determine how real the option of solar electricity is, and what needs to be done to facilitate it further. The survey was carried out by Energy Alternatives Africa, a Kenyan NGO, and financed under the ESMAP 1 1 The Joint UNDP/World Bank Energy Sector Management Assist ance Programme (ESMAP) is a special global technical assistance program run by the World Bank’s Industry and Energy Department. ESMAP provides advice to governments on sustainable energy development. Established with the support of UNDP and 15 bilateral official donors in 1983, it focuses on policy and institutional reforms designed to promote increased private investment in energy and supply and end-use energy efficiency; natural gas development; and renewable, rural, and household energy. program of the World Bank. The article expresses the opinions of the authors and not of their institutions; The authors are solely responsible for the contents.

Reforms in the oil industry: The available options

In the 1990s, a considerable number of countries of the region embarked on substantial changes in their regulations governing the oil industry, with the aim of doing away with public monopolies, promoting competitive markets, and encouraging increased private investment under new forms of contracts. These reforms had a considerable impact on the economic stabilization programmes, since they involved price corrections which helped to reduce fiscal pressures, as well as leading to the restructuring and financial reorganization of public oil companies.

Private Investment and Endogenous Growth: Evidence from Cameroon

This paper investigates empirically the factors that have influenced economic growth in Cameroon during 1963-96. The results, which support the endogenous-growth-type model, indicate that (1) the aggregate production function exhibits increasing returns to scale; (2) the impact of increases in private investment on growth is large, significant, and robust; (3) increases in government investment have a positive impact on growth; (4) human capital development plays an important role in output expansion; (5) positive externalities are generated by physical and human capital accumulation; and (6) growth is boosted by economic policies that foster external competitiveness and a prudent fiscal stance.

Private Investment and Endogenous Growth: Evidence From Cameroon

This paper investigates empirically the factors that have influenced economic growth in Cameroon during 1963-96. The results, which support the endogenous-growth-type model, indicate that (1) the aggregate production function exhibits increasing returns to scale; (2) the impact of increases in private investment on growth is large, significant, and robust; (3) increases in government investment have a positive impact on growth; (4) human capital development plays an important role in output expansion; (5) positive externalities are generated by physical and human capital accumulation; and (6) growth is boosted by economic policies that foster external competitiveness and a prudent fiscal stance.