Private Sector Investment Research Articles

Government Sector Spending and Private Investment: Evidence from Kenya

The private sector investment plays an integral part in guaranteeing economic soundness of an economy. In Kenya, the recurrent government expenditure increased sharply in the last two decades although this has not been commensurate to the private capital growth rate. Further, past empirical studies on recurrent sectoral expenditure and private investments have yielded mixed results with some in favor of the crowding-in hypothesis and other crowding-out effects (Buiter, 1977). Due to this controversy, the link between private capital formation and sectoral public spending remains unresolved in Kenya. The study used secondary data for 1963 to 2018 from various Statistical abstracts and Economic surveys reports. Both the Autoregressive Distributed Lag (ARDL) model and the Error Correction Model (ECM) estimation method were used to realize the study objective. Generally, this result posed mixed results on how health, education, agriculture, infrastructure and defense recurrent outlays impact private investment. The study components result indicates promotion and demotion of private investment in the country. The recurrent outlays in most public spending were found to crowd-in private investment significantly. These findings will inform the formulation of relevant vibrant fiscal policies to switch government spending in sectors that will spur private investment and hence economic growth in Kenya. Keywords: Recurrent spending, private investment, capital information, crowding-out, sector, Keynesian model. DOI: 10.7176/JESD/13-18-05 Publication date: September 30 th 2022

Economics of Sesame and Its Use Dynamics in Ethiopia.

Ethiopia's oilseed industry makes a major contribution to foreign exchange revenues. Ethiopia's three main oilseed crops (sesame, soybean, and Niger seed) account for about 20% of the country's total agricultural export profits, second only to coffee. Even though Ethiopia is one of the world's largest producers and exporters of sesame seeds, the country is facing increasing supply and demand restrictions. This paper begins with an examination of one of the most prominent oil crops in the country. It is a highly adaptable crop that may be used for anything from subsistence to commercial output. We established a comprehensive scientific understanding of the crop using a systematic review of the current literature and deductive logical reasoning that can be used to inform future research and policies. Various exclusion and inclusion criteria were used to filter the most notable findings. Millions of growers and other market participants are employed throughout the oilseed value chain. Reduced sesame productivity, pests and diseases, and limited access to modern technologies are all severe supply-side constraints. On the demand side, traders and market distortion, as well as an artificially higher home price and the ease with which unskilled labor can enter the market, are all factors. Other demand-side constraints include worldwide price volatility, a highly concentrated export market, and intense global competition. Ethiopia's sesame seed development potential is being severely hampered by these restrictions. If farmers, dealers, and the government do not address these issues strategically, the country may soon lose its competitiveness in the global sesame seed market. This will contribute to Ethiopia's ongoing discussion about how to better inform private and public sector policies and investments to increase sesame production, transform agriculture, improve nutrition and food systems, and be able to ease supply- and demand-side restrictions. In a nutshell, an increased area under cultivation combined with best agronomic practices could boost sesame production. Farmers, policymakers, researchers, and other stakeholders must thus intervene to enhance sesame production. Future studies should concentrate on how to boost sesame output in farmers' fields while following appropriate sesame production technology and agronomic principles.

Policy actions for developing the infrastructure sector: Learnings from the Indian experience

The infrastructure sector is one of the major pillars for economic growth and development of a country. The responsibility to develop this crucial sector is shifting away from the public to the private sector. After the economic liberalization in 1991, India opened the infrastructure sector, among many others, to private domestic and foreign investment. The shortage of electricity, the poor state of roads, and limited telecom access necessitated a stream of persistent reforms, which were expected to play a significant role in the infrastructure sector's growth. Although some subsectors witnessed success, others continued to face hurdles. The paper highlights the role of infrastructure in socio‐economic development through global literature. It also presents a story of infrastructure development in India since the inception of economic liberalization. It highlights various challenges that discourage private sector investments, thus providing a rationale for policy initiatives by the government. The paper also presents critical issues highlighted by multiple government committees over nearly three decades and identifies residual issues that merit attention. The outcomes of the paper are relevant in the context of developing and emerging economies.

Blue bonds for marine conservation and a sustainable ocean economy: Status, trends, and insights from green bonds

Amid funding shortfalls to address ongoing ocean degradation, blue bonds are being designed to finance sustainable development and conservation projects in ocean and coastal areas via private sector investment. Blue bonds seek to deliver both positive environmental and/or social impact alongside a financial return on investment to investors. However, there has been limited academic scrutiny of these early initiatives to evaluate whether this rhetoric is justified. This article leverages 15-years of scholarship on green bonds to develop an analytical framework that is applied to five of the world’s first blue bonds. A comprehensive content analysis of sources such as blue bond project documents and secondary interviews is used to synthesise their characteristics, and consider trends related to their thematic scope, geographical scope, environmental impacts, and financial returns. Thematically, blue bond proceeds are channelled towards projects aligned with Sustainable Development Goal (SDG) 14 ‘Life Below Water’, the Blue Economy, and policy discourse around the ‘blue recovery’ from covid-19. These projects range from marine protected area (MPA) creation, to improved fisheries management, and potentially, oil and gas exploration. However, greater explanation of the logic through which project activities are expected to deliver impact and returns is warranted. Equally, impact measurement is often underwhelming, with many bonds targeting easy-to-measure outputs (e.g., area conserved) rather than outcomes and impacts (e.g., increases in fish abundance). While an alluring and useful financial innovation, greater disclosure on the individual projects and enterprises that blue bonds finance is necessary to validate their sustainability credentials and inform investor decision making.

Unlocking private investment as a new determinant of green finance for renewable development in China

The COVID-19 pandemic has pushed up the green finance for renewable energy development. Private investment has been recognized as a dominant driver of the renewable energy industry, an essential and critical step in averting greenhouse gas emissions. Nonetheless, despite the increasing pace, private investment in green finance for renewable development is still restricted to several developed nations, where it is crucial. Prior studies have offered some understanding of the complexities and challenges that investment confronts in this industry, which remains underexplored in the case of China. This study employs the ARDL-PMG model used to examine the public listed companies in Shanghai and Shenzhen during China's 2010–2020 period. This research adds to the body of knowledge by rigorously examining the variables on FDI in renewable energy production in China and how these effects differ depending on the source of investment. Some of these factors include the adoption of national renewable energy legislation, the supply of foreign public money, and the broader economic environment. The findings indicate that worldwide financial assistance, legislative support policies, feed-in tariffs, and economic stability are potent drivers of green finance for developing renewable energy investment in China. Further, this research explains that the impacts of private sector investment and entrepreneurial contextual factors on expenditure vary depending on the source of finance, emphasizing the importance of dissecting investment spreads to fully comprehend private investment decisions in green finance for renewable development.

Financing the SDGs: How Bangladesh May Reshape Its Strategies in the Post-COVID Era?

COVID-19 has acutely arrested the attainment of sustainable development goals (SDGs). Internal mobilization of resources got slimmed as the government's expenditure on health and social safety nets have increased. External sources are also constricted owing to the uncertainties over the cross-border investment and economic recovery process of the countries. A government study in 2017 projected that Bangladesh, on average, would need an additional USD 68.83 billion from internal sources and USD 11.03 billion from external sources since 2021 to accomplish its SDGs by 2030. Using autoregressive distributed lag (ARDL)forecasting techniques, this paper re-estimated future flows of all SDGs funding sources, e.g., fiscal revenues, private sector investment, non-government organizations (NGOs), public–private partnerships, foreign direct investments, and foreign grant still 2030 under the purview of the COVID-19. Revised allocation estimated by this study reveals that private investment and NGOs would need to contribute higher than the 2017 estimation during 2021–2025 while only private investment needs to be higher during 2026–2030.

Implementing nationally determined contributions under the Paris agreement: an assessment of climate finance in Caribbean small island developing states

ABSTRACT This perspective paper explores the potential of climate finance to support Caribbean Small Island Developing States (SIDS) efforts in achieving their Nationally Determined Contributions (NDCs) under the 2015 Paris Climate Agreement. Through a content analysis of sixteen Caribbean countries NDCs, it provides, first, a comprehensive overview of SIDS countries’ perspectives on climate financing needs for mitigation and adaptation activities in meeting their climate targets. Second, the paper examines whether Caribbean SIDS acknowledge a role for domestic financing and international and domestic fiscal policy reform within their NDCs, as a way to address climate change mitigation and adaption. The analysis of Caribbean SIDS NDCs reveals that only eight countries provide clear cost estimates for mitigation activities, five for adaptation and one with a combined cost. This gives a total of US$51.3 billion for the combination of Caribbean countries across their NDCs. The majority of climate change activities identified in the NDCs are conditional on the provision of international climate finance. While some countries discuss domestic sources of finance, few note the need for domestic fiscal policy reform to counteract direct and underlying drivers of greenhouse gas emissions and their reduction. The findings suggest that, while much attention is directed to inadequate quantities of international climate finance, fiscal policy and the use of domestic finances are important for realizing transformative change and yet receive little attention from in-country policymakers. Key policy insights Caribbean SIDS suffer from a significant climate finance gap. Caribbean countries cannot remain dependent on international climate finance and must pursue more innovation and diversified options to achieve climate goals. Caribbean countries struggle to use domestic policy and investment options to align finance and incentives to promote their climate goals. The region faces challenges inherent in aligning domestic fiscal policies and other economic and regulatory incentives, as well as private sector investment, to complement and augment international climate finance objectives.

Renewable Energy Financing and Sustainable Industrial Development in Nigeria

Due to the inability of renewable and non-renewable sources of energy to meet the ever-increasing industrial energy need in Nigeria, there is therefore need to explore various financing option available to execute renewable energy project that will contribute to the energy basket which will sustainably impact industrial development in Nigeria. Obtaining secondary data from World development indicator from 1980 to 2021, the study utilized the auto-regressive distributed lag method to estimate the long run impact of renewable energy financing and sustainable industrial development in Nigeria. The findings reveal that the use of external debt for financing renewable energy as well the use of energy from Combustible waste source and alternate nuclear source significantly and positively determines the development of the industrial sector in Nigeria. while the use of taxation and donation to fund renewable energy as well as the use of energy source from hydroelectric were not contributing significantly to sustainable industrial development in Nigeria. The study further recommends that relevant framework that will make investment in renewable energy as well as the utilization of renewable energy to be attractive to various stakeholders in Nigeria should be established. The underlying downside risk in renewable energy utilization and financing must be address so as to mobilize sufficient private sector investment needed to drive sustainable industrial development in Nigeria

Evaluating feed-in tariff policies on enhancing geothermal development in Indonesia

Geothermal is vital for sustainably meeting Indonesia's energy demand, given its estimated massive reserves potential equivalent to 24 GW of electricity. The Indonesian government has set geothermal contributions to the national energy mix at 7,241.5 MW by 2025 and 17,546 MW by 2050, despite harnessing such vast potential needing significant investment. To that goal, the government established a feed-in tariff (FIT) mechanism to encourage private sector investment in geothermal development. However, FIT has undergone significant alterations in a short period. Moreover, various complicating factors—bureaucracy, social, and technical—exist alongside FIT implementation. Therefore, the extent that FIT can effectively enhance geothermal development in Indonesia should be challenged with further investigation. This study explores the efficacy of FIT policies for geothermal electricity by comparing the performance of several FIT schemes in terms of their impact on the government's target achievement. This study combines the policy analysis framework with system dynamics modeling to understand the dynamic interaction of FIT policy and other important components in geothermal development. The findings show that modest bureaucracy and public support are required. Furthermore, to enhance geothermal development more effectively, FIT should be at least 11 cents US$/kWh and accompanied by technical breakthroughs and government-funded exploration activities.

The Impact of Financial Deepening on Economic Growth: Empirical Evidence from Yemen (1994-2018)

This study attempted to investigate the impact of financial deepening on economic growth in Yemeni, using time series based on the use and application of an Autoregressive Distributed Lag Model (ARDL), where data is collected from the World Bank, Yemen's central bank, and the central statistical organization for 1994-2018. The importance of the study lies in knowing the role of financial and economic policies by measuring and analyzing the impact of financial deepening on the Yemeni economy. The study used the independent variable of financial deepening captured by credit to the private sector, grants, Remittances, money supply, banks assets, and foreign direct investment, while the dependent variable gross domestic product is used to measure the economic growth. The results revealed a significant impact of financial deepening on Yemen's economic growth and found the existence of co-integration between the variables and long run relationship. The study recommended that policies that encourage credit borrowing for the private sector should be encouraged.

Do IMF Programs Stimulate Private Sector Investment?

Do IMF Programs Stimulate Private Sector Investment?

Relevansi Skala Optimum Belanja Pemerintah terhadap Pertumbuhan Ekonomi dan Financial Distress Kabupaten/Kota di Provinsi Maluku

This research attempts to evaluate the impact of optimum government size to economic growth and the government financial distress in districts of Maluku. The government size would intuitively drive economic growth. Especially in the eastern hemisphere of Indonesia which has lower economic activity compared to other regions. Furthermore, the bigger government size would increase the government's financial distress, since the income could not cover the mandatory spending and long term liabilities. The evidence of this research shows that the government size does not significantly impact both the per capita regional GDP and financial distress of the districts in Maluku. However, the level of private sector investment is significant in forming the per capita regional GDP and the level of liabilities would affect the level of government financial distress. The results also demonstrate the importance of government expenditure composition, especially mandatory spending, that may be considered as the significant factors that impact overall economy and the local government financial condition.

Old Wine in a New Bottle

Resistance to neoliberal legal reforms has increased globally in recent decades due to the failure of water privatization to ensure affordable and sustainable water access in the global South. Referring to the 2004 and 2019 Water Resources Laws, this paper explores how, in the case of Indonesia, the law reproduces and normalizes neoliberal ideologies that frame water as an economic commodity. We argue that Indonesia's current legal regime governing water resources is based on populist rhetoric of fulfilling the human right to water through state management. However, the adopted water governance regime aims to facilitate the establishment of a climate conducive to private sector investment by shifting responsibility for the fulfillment of the human right to water from the state to a market-based allocation system. This paper examines the strategy adopted by the government in securing the water privatization agenda when dealing with judicial activism that requires water to be managed as a public good.

Creative Hubs in Hanoi, Vietnam

Creative Hubs in Hanoi, Vietnam

Using donor funding to catalyse investment in malaria prevention in Ghana: an analysis of the potential impact on public and private sector expenditure

BackgroundAn estimated 1.5 billion malaria cases and 7.6 million malaria deaths have been averted globally since 2000; long-lasting insecticidal nets (LLINs) have contributed an estimated 68% of this reduction. Insufficient funding at the international and domestic levels poses a significant threat to future progress and there is growing emphasis on the need for enhanced domestic resource mobilization. The Private Sector Malaria Prevention (PSMP) project was a 3-year intervention to catalyse private sector investment in malaria prevention in Ghana.MethodsTo assess value for money of the intervention, non-donor expenditure in the 5 years post-project catalysed by the initial donor investment was predicted. Non-donor expenditure catalysed by this investment included: workplace partner costs of malaria prevention activities; household costs in purchasing LLINs from retail outlets; domestic resource mobilization (public sector financing and private investors). Annual ratios of projected non-donor expenditure to annualized donor costs were calculated for the 5 years post-project. Alternative scenarios were constructed to explore uncertainty around future consequences of the intervention.ResultsThe total donor financial cost of the 3-year PSMP project was USD 4,418,996. The average annual economic donor cost per LLIN distributed through retail sector and workplace partners was USD 21.17 and USD 7.55, respectively. Taking a 5-year post-project time horizon, the annualized donor investment costs were USD 735,805. In the best-case scenario, each USD of annualized donor investment led to USD 4.82 in annual projected non-donor expenditure by the fifth-year post-project. With increasingly conservative assumptions around the project consequences, this ratio decreased to 3.58, 2.16, 1.07 and 0.93 in the “very good”, “good”, “poor” and “worst” case scenarios, respectively. This suggests that in all but the worst-case scenario, donor investment would be exceeded by the non-donor expenditure it catalysed.ConclusionsThe unit cost per net delivered was high, reflecting considerable initial investment costs and relatively low volumes of LLINs sold during the short duration of the project. However, taking a longer time horizon and broader perspective on the consequences of this complex catalytic intervention suggests that considerable domestic resources for malaria control could be mobilized, exceeding the value of the initial donor investment.

Public Capital and Economic Growth Dynamics in Nigeria

Using annual time series data covering the period 1981 to 2017, this paper investigates the relationship between public capital investment and economic growth in Nigeria using the General to Specific (GETS) approach. The empirical findings reveal that public capital and labour force have a detrimental impact on economic growth. The study also discovered that private capital and growth are positively related. The Granger causality tests, on the other hand, unveil that both bidirectional and unidirectional causal linkages. As a result, these findings suggest that infrastructure development should be emphasized through public-private partnerships and a favourable investment climate to stimulate private sector investment to sustain long-term economic growth should be improved.

Public Capital and Economic Growth Dynamics in Nigeria

Using annual time series data covering the period 1981 to 2017, this paper investigates the relationship between public capital investment and economic growth in Nigeria using the General to Specific (GETS) approach. The empirical findings reveal that public capital and labour force have a detrimental impact on economic growth. The study also discovered that private capital and growth are positively related. The Granger causality tests, on the other hand, unveil that both bidirectional and unidirectional causal linkages. As a result, these findings suggest that infrastructure development should be emphasized through public-private partnerships and a favourable investment climate to stimulate private sector investment to sustain long-term economic growth should be improved.

An Overview on Recycling of Photovoltaic Modules at the End of Life (EoL)

Due to the current situation of fossil fuels eradication and over-exploitation across the world. The energy demands of the world are to be fulfilled by renewable energy sources. Among these Solar energy has the maximum potential to be exploited to the maximum level to full fill the energy demands of the world. Renewable energies contribute to the environmental, social, and economic development of countries [1]. There are various of clean and renewable energy sources such as Solar, biomass, wind, hydrogen, fuel cell, nanocomposite, and supercapacitor. Each of the energy sources are suitable for specific geographical locations and can suits from region to region [6]. Since ages Sun has been praised as a vitalizer of life. The total Solar energy absorbed by Earth's atmosphere, oceans and land masses is approximately 122 PW·year = 3,850,000 exajoules (EJ) per year. Most of the world's population live in areas with insolation levels of 150– 300 watts/m2, or 3.5–7.0 kWh/m2 per day [2 google- Solar Wikipedia]. Solar energy is the most secure and ubiquitous source of energy to meet the power needs after coal exploitation. In present time installation of photovoltaic (PV) Solar modules are growing extremely fast. As result of the increase, the volume of modules that reach the end of their life will grow at the same rate in the near future. Global installed PV capacity reached around 773 GW at the end of 2020 [3] and is expected to rise further to 2840 GW by 2030 and 4500 GW by 2050 [4, 5-Abstract ]. Considering an average module lifetime of 25 years, the worldwide Solar PV waste is anticipated to reach between 4%-14% of total generation capacity by 2030 and rise to over 80% (around 78 million tonnes) by 2050 [5-Abstract]. Therefore, the disposal of PV modules will become a pertinent environmental issue in the next decades. Eventually, there is plenty of room for progress in this area. This review present core reality of Photovoltaic Life Cycle, Photovoltaic Technology, Photovoltaic Recycling Process as well as global Waste Management Regulation in different countries and the Environmental & Economic Aspects of recycling. At present, PV recycling management in many countries envisages to extend the duties of the manufacturers of PV materials to encompass their eventual disposal or reuse. However, further improvements in the economic viability, practicality, high recovery rate and environmental performance of the PV industry with respect to recycling its products are indispensable. There is potential to develop new pathway for PV waste management industry development and offer employment and prospects for both public and private sector investors. Keywords: Recycling, End of life (EoL), Photovoltaic, Waste, Regulatory, c-Si, Thin film, Life cycle

A review of existing policy for reducing embodied energy and greenhouse gas emissions of buildings

The building sector is a significant contributor to global energy demand and greenhouse gas emissions and thus has a major role in combating climate change. To date, efforts to address this issue have focussed on reducing energy demand during building operation, resulting in significant reductions in this area. However, recent studies have shown that substantial improvements to operational energy efficiency have increased the relative significance of indirect or embodied energy demands and associated greenhouse gas emissions. Subsequently, policies addressing this next frontier of energy and emissions reductions are emerging. To understand different approaches and inform future development, this study reviews existing policy mechanisms targeting embodied energy and greenhouse gas emissions in the building sector for four countries – Australia, Canada, USA and United Kingdom. The study found that voluntary instruments dominate the policy landscape, with regulatory measures largely absent at national levels and confined to inconsistent application across lower levels of governance. Signals of change emerging from the analysis include growing private sector investment and increasing quantitative targets for reduction. The study concludes with the challenges facing this sector of energy governance, alongside recommendations for regulated caps, mandatory LCA reporting, prerequisite requirements in voluntary instruments, data accessibility and resolving methodological inconsistencies.

Gambling with lottery stocks?

In this article, we assess whether German private investors gamble in the stock market. Other studies that have analyzed private investors’ preferences with regard to lottery-like characteristics have used retail or discount brokerage data. They have shown that stock trading has common entertainment features with traditional gambling. In particular, clients of discount brokers may invest for speculative purposes and thus have disproportional preferences for lottery-like characteristics. In consequence, assessing preferences by solely using a subset of investors—associated brokerage clients—may lead to substantially biased results. We assess this issue by using SHS-base data from Deutsche Bundesbank which captures the aggregate holdings of the German private sector. In line with the research, we find that German private investors overinvest in stocks with lottery-like features. Yet, when assessing the economic significance of the aggregate overinvestment, the effect is negligible. Further, we do not find consistent evidence of skewness that positively affects the aggregate holdings of the private sector. As studies have identified preferences for skewness as a driving force for retail investors’ stock purchases, our results challenge the preconceived notion of which characteristics actually induce (disproportional) private sector investments.