Promote Private Investment Research Articles

Regarding the finance-investment nexus in sub-Saharan Africa: an issue of too little or too much finance?

PurposeThis study investigates the finance-investment nexus in sub-Saharan Africa using data from 41 countries spanning the period from 2000 to 2022. The central question addressed is whether there is a “too little” or “too much” finance problem in the region.Design/methodology/approachThis study employs a system-generalised method of moments (GMM) approach to analyse the association between finance and private investment. Additionally, a dynamic threshold regression model is used to uncover potential nonlinearities in this relationship.FindingsInitially, the study identifies a negative correlation between increased finance and private investment. However, further analysis using the dynamic threshold regression model reveals a critical threshold level of finance. Specifically, the threshold is found to be 6.52% of domestic credit to the private sector and 23.18% using the financial development index. Below this threshold, finance negatively impacts private investment, while surpassing this threshold leads to positive growth in private investment. These findings indicate an issue of “too little” finance in the finance and private investment nexus in sub-Saharan Africa. The results are robust across different model specifications.Research limitations/implicationsThe implications of this study highlight the importance of identifying critical thresholds for financing to enhance investment expenditures in the region.Originality/valueThis study contributes to the literature by uncovering nonlinearities in the finance-investment nexus in sub-Saharan Africa. The identification of critical thresholds provides valuable insights for policymakers, emphasising the need to strengthen the financial sector in countries operating below these thresholds to promote private investment and economic growth.

Geothermal and wind energy: Sustainable solutions for Pakistan’s energy economics

The need for green energy sources like wind farms and geothermal energy has increased along with the world’s energy requirements. These developments offer reliable and clean energy with significant economic advantages, particularly for trade deficit countries like Pakistan. Geothermal and wind energy development reduces dependency on imports of fossil fuels, generates employment, and helps mitigate climate change. Pakistan struggles to meet its energy needs and economic targets like many other developing countries. Therefore, National research priorities should integrate geothermal and wind energy storage and discover relevant resources. This article summarizes how geothermal and wind energy technologies might support economic development objectives and promote sustainable energy production. The technological and financial possibilities, challenges, and opportunities, as well as the present and future of these technologies, are considered in the case study. In Pakistan, laws and policies are being established to promote renewable energy development. For example, the Alternative Energy Development Board is the public authority that encourages and enables the growth of renewable energy. This study proposes regulations to stimulate the use of renewable energy sources, promote private investment, and foster a favorable atmosphere for their growth.

The Role of Private Investment and the Relationship between Monetary Policy and Economic Growth in Nigeria.

Despite government initiatives and policy reforms promoting private investment, such as the Structural Adjustment Programmes and various economic reform policies, Nigeria has experienced minimal improvement in private investment indicators, with the share of private investment in economic growth fluctuating over the years, characterized by intermittent increases and declines. Thus, the study investigates the role of private investment and the relationship between monetary policy and economic growth in Nigeria. The study utilized secondary data obtained from the Central Bank of Nigeria through an ex-post facto research design spanning from 1985 to 2022. Employing an autoregressive distributed lag model, which includes an error correction mechanism and cointegration test, the analysis examined variables, revealing that private investment mediates positively in the relationship between monetary policy and economic growth in Nigeria. The findings underscored the significant impact of private investment on the nexus between monetary policy and economic growth, suggesting policy recommendations including incentivizing private investment through the removal of capital controls and investment regulations, reducing or eliminating taxes and regulatory burdens, and fostering a supportive environment for business creation.

Empirical evidence on the relationship between migrants' remittances and private investment in Burkina Faso: A dynamic simultaneous equation model

AbstractThis research explores the channels through which migrant remittances can promote private investment. The research method favours a dynamic simultaneous equation model estimated using a combination of the bootstrap method and the three‐stage least squares estimator to account for the interdependence between remittances and private investment. The study area is Burkina Faso, and the period of analysis covers the period 1985–2021. One of the main findings is that the level of corruption risk and the demographic dependency ratio are important transmission channels. Findings suggest creating an institutional framework that enhances the level of transparency and accountability and accelerates the demographic transition process.

Who is responsible for developing energy policy interventions in Mozambique? A stakeholder analysis and social network analysis

PurposeThis study highlights the crucial significance of stakeholder participation in the creation of a comprehensive energy and electrical master plan for Mozambique. The purpose of this study is to deliver a practical insights that transcend theoretical concerns by digging into the subtleties of stakeholder relationships and strategic collaborations, paving the path for pragmatic and meaningful solutions that connect with real-life conditions. This debate lays the groundwork for educated decision-making, propelling Mozambique’s energy industry towards a more sustainable and prosperous future.Design/methodology/approachThe study used a combined approach of stakeholder analysis (SA) and social network analysis (SNA) to enhance our understanding of the stakeholder landscape in Mozambique’s energy sector. This methodological approach offers a unique vantage point to examine the individual stakeholders’ roles and the intricate web of connections, partnerships, collaborations and information-sharing activities. By integrating SA and SNA, this study aims to provide a more comprehensive and dynamic depiction of stakeholder interactions, contributing methodologically to the existing body of literature.FindingsThe findings also highlight the need to develop frameworks that promote private investment and joint endeavours with entities such as Cahora Bassa Dam/Mozambique Transmission Company. A consistent legal framework ensures uniform performance and a robust monitoring system for ongoing projects, improving accountability and progress tracking. Furthermore, the discussion includes enhancing the competence of the regulatory agency regulating the electricity industry. This includes tackling complex concerns with electricity pricing and other regulatory aspects relevant to private investment. A highly empowered regulatory agency is critical to creating an atmosphere conducive to long-term private sector involvement.Research limitations/implicationsWhile the study emphasises the need to integrate multiple stakeholders, it may not detail specific issues or impediments that may develop during the engagement process. Additional research could look into potential tensions or barriers to effective collaboration. Furthermore, the study emphasises the necessity of addressing environmental impacts; it must thoroughly examine specific environmental concerns such as carbon emissions, deforestation or renewable energy possibilities. Future research could assess the suggested policies’ environmental impact more extensively. Additionally, while the conclusion briefly mentions economic prosperity, a more thorough consideration of the possible economic and social implications of various energy policies could provide a greater understanding of their practicality and potential benefits.Practical implicationsIn terms of practical contributions, this study aspires to shed light on how stakeholder interactions can shape energy policy interventions that ensure reliable and affordable energy sources for economic development and societal well-being. By unveiling the complex network of relationships and partnerships, this study seeks to provide actionable insights for policymakers, industry players and other stakeholders involved in Mozambique’s energy sector. By taking this action, this research aims to pave the way for more effective and inclusive energy policies that align with circular economy principles, thus addressing a critical need in scholarly discourse and practical implementation.Originality/valueThe study underscores the critical role of energy stakeholders in shaping energy policies and projects, given their influential positions and impact on decision-making processes. While existing literature acknowledges this influence, a discernible research gap exists in comprehensively understanding how stakeholder interactions and collaborations in the energy sector affect policy interventions within a context such as Mozambique. This study seeks to bridge this gap by delving into the intricacies of stakeholder involvement and its implications for energy policy development in Mozambique.

Integrating spatial analytics in power system planning techniques for the green energy transition

Abstract. Fossil fuel energy generation contributes significantly to greenhouse gas emissions globally. Energy transition towards sustainable, low-carbon energy needs to occur. South Africa has pledged to achieve a net-zero carbon economy by 2050 and in-line with this energy transition. The country has implemented the Renewable Energy Independent Power Procurement Programme (REIPPPP) to promote private investment within the energy sector. As new capacity is constructed, it requires the national grid to move from a vertically integrated passive power model to a deregulated active power flow due to the distributed sources of energy. In this paper, a method for connecting distributed power producers is introduced by providing candidate locations for Network Planners to develop insights for optimal placement of collector stations that connect multiple power producers in an orderly manner onto the electrical grid. This method uses buffer distances and Voronoi polygons from the stations on the national grid in order for the power producers to be aggregated and assigned connection to a collector station. Furthermore, this paper proposes a model for potential power producers that allows Network Planners to adequately plan for future grid access applications.

Symmetric and asymmetric impact of public investment on private investment in South Africa: Evidence from the ARDL and non-linear ARDL approaches

This study examines the impact of public investment on private investment in South Africa using the autoregressive distributed-lag (ARDL) and nonlinear ARDL bounds testing approach for the period from 1980 to 2018. The ARDL results show that public investment crowds in private investment in the long and short run. The NARDL results indicate that the negative shock in public investment leads to a decrease in private investment in the long and short run. The results show that public investment has an asymmetric impact on private investment in South Africa. The study recommends that government increase investment in infrastructure such as energy, roads and railways, among others, in order to promote private investment.

Políticas de investimentos agrícolas em Angola: projetos em concorrência e as tendências do século XXI

For approximately four decades, the Angolan gov-ernment has favored investment policies based on national corporations, policies which are changing in recent years due to the appeal for foreign direct investment. In this context, this article intends to reflect on agricultural investment policies in Angola, aiming above all to understand the growth trend of agribusiness and the various competing projects for agricultural development. This reflection implies considerations about these projects and the agricul-tural policies implemented over the past 40 years and the effects of the recent government developments to promote private investment in agriculture in the post-civil war period.

The Root of Hyperinflation in Venezuela: Statism, Chavismo, and Dictatorship

Venezuela, endowed with abundant oil resources, was one of the wealthiest countries in Latin America, with a promising future. However, Venezuela’s economic condition has dramatically deteriorated in recent years, with the country experiencing hyperinflation and a major recession in 2016. The popular view is that Venezuela suffers from the “Dutch disease,” in which a government develops an unsustainable reliance on natural resource exports at the expense of other sectors, making the economies increasingly susceptible to volatile global oil prices and capital flights. This study compares economic data from oil-dependent countries around the world and reveals that the “Dutch disease” theory can only explain Venezuela’s economic downturn, not its deep recession and hyperinflation. This essay then delves into three sociopolitical causes of Venezuela’s poverty crisis: aggressive Chavismo statist policies that overextended the Venezuelan economy and made it vulnerable to international oil prices, a strong presence of illegal market sectors that disrupted market equilibrium, and Venezuela’s personal dictatorship under the Chávez-Maduro administration. Despite the preceding three sociopolitical factors contributing to Venezuela’s hyperinflation, the country’s economic outlook is positive owing to a vacancy in the global oil market as a result of the 2022 Ukrainian summer counteroffensive. This paper proposes that the key to successfully resolving the crisis is promoting private investment and tackling the resource curse, both of which require a robust democracy with an independent press and judiciary. Venezuela may seek international assistance to implement political reforms, abolish foreign exchange restrictions, and move toward economic liberalization.

The Political Resource Blessing or Curse? Patronage Networks, Infrastructure Investment, and Economic Development in China

Does the patron-client connection between local governments and their superiors improve or hurt the local economic development? Although recent research suggests that patron-client connections boost local economic performance, this paper investigates the potential costs and risks of connection-driven economic development. With a difference-in-differences design applied to Chinese prefecture-level cities, I find that politically connected cities were more likely to win their superior’s support to obtain the projects approved by the four-trillion-Yuan stimulus enacted in 2008 and increased the city’s public investment in infrastructure. Meanwhile, these politically connected cities accumulated more public debts than other unconnected cities. Furthermore, those cities that lacked such political connections were more likely to promote private investment by introducing business-friendly policies. These results show that patron-client connections make an economic development model that features government investment and public debts more possible than the one that depends on vibrant entrepreneurship and private investment.

Effect of Public Investment on Private Investment: Evidence from Ethiopia

This study examined the effect of public investment on private investment and their relative effects on Ethiopia economic growth. The study employed the ARDL bounds testing approach. The empirical results revealed that public investment has a crowding-in effect on private investment in the long run which means, public investment stimulates private investment in the long run. However, the study revealed that public investment has a crowding out effect on private investment. In the other word, public investment has no direct impact on economic growth in the long run. However, private investment has a significant positive impact on economic growth in the long run while it is negatively related to economic growth in the short run. This suggests that private investment positively contributes to economic growth more than public investment. In addition, economic growth is positively associated with private investment although it is statistically insignificant in the long run. This implies that it is prudent for policy makers not to cut back on the efficient component of public investment and increase infrastructural public investment to a level that promotes private investment in the long run thereby indirectly fostering economic growth.

Trends in Tobacco Production and Prices in Malawi.

Diversification away from tobacco production has been identified as a priority for Malawi, historically one of the world's most tobacco-reliant countries. This paper refers to a nationally representative data set to characterize broad trends in production since 2000 to understand whether Malawi is shifting away from tobacco and how production has changed over time. From 2004 to 2019, the share of Malawian crop farmers producing tobacco fell from 16% to 5%, and tobacco's share of the total value of crop production also declined sharply. Tobacco farms are generally growing larger (in size and scale of production) over time. However, land productivity remains low, with net returns of 93 000 MWK (128 USD) per hectare at the median. Farm-gate prices for tobacco have declined relative to the prices of maize or fertilizer, rendering tobacco a less lucrative avenue to generate the cash income needed to purchase these key items. In addition, the share of the export price received by farmers has also declined over time, with the median farm-gate price representing 32% of the export price in 2004 and 18% in 2019. In some respects, a transition away from tobacco has already occurred. Additional research is needed to understand why the farm-gate share of tobacco export prices has declined over this period and how the livelihoods of smallholder farm-households that exited tobacco production have been affected. To the extent that tobacco prices appear to be declining, there is a need to rigorously assess whether farmers have suitable crop alternatives (with established markets) and other livelihood options. Likely, investments are yet needed to foster strong alternatives to tobacco; such investments include research and development in on-farm technologies to raise the productivity of non-tobacco crops, as well as improvements in non-tobacco value chains to reduce transportation costs and promote private investment.

The role of green roofs in post COVID-19 confinement: An analysis of willingness to pay

Urban population is becoming less likely to contact with nature. Yet, green infrastructure, as green roofs, provide multiple ecosystem services, as promoting citizens physical and psychological well-being. With the Coronavirus 19 world pandemic public spaces, like parks and other recreational areas, were closed and most citizens were confined to their dwellings. In this context, the need for outdoor space in the housing environment became more necessary than ever. This study is based on a survey performed to citizens living in 35 different countries to identify their access and value given to existing green areas in the home environment during and after confinement, and their willingness to pay (WTP) for an accessible green roof. Results indicate that 68% of respondents missed having a garden during the confinement and the outdoor space value increased after the confinement. Most are willing to pay for a medium sized accessible green roof and their WTP increases if the green area is bigger. WTP for medium sized green roofs is higher in other countries than in Portugal but not significantly different for larger green roofs. To promote private investment in green roofs, citizens WTP should be considered when designing new urban green infrastructure incentive policies.

Does FDI inflow crowd in private investment? Empirical evidence for the Southeast region of Vietnam from the panel quantile regression approach

Well-known to be the most dynamic economic region in Vietnam with the establishment of more export processing zones, high technology parks, and industrial zones, the Southeast region is increasingly attracting more capital flows from all over the world. Does FDI inflow crowd in private investment in this region? To answer this research question, the study examines the effect of FDI inflow on private investment for a sample of 6 provinces/cities of the Southeast region between 2005 and 2019 using the panel quantile regression approach, the difference GMM Arellano-Bond, and the FE-IV estimator. The results show that FDI inflow crowds in private investment in this region. In addition, public expenditure, inflation, and population also promote private investment. These findings suggest some crucial policy implications for local governments in this region to receive more FDI inflows as well as promote private investment.

Review and Recommendations for Renewable Energy Policies and Regulations to Promote Private Investment in Liberia

Review and Recommendations for Renewable Energy Policies and Regulations to Promote Private Investment in Liberia

Does institutional quality and remittances inflow crowd-in private investment to avoid Dutch Disease? A case for emerging seven (E7) economies

This study investigates the role of remittances and institutional quality in promoting private investment for emerging seven (E7) economies. This study further analyzes whether the private investment is crow-out due to Dutch disease phenomena or a crow-in. This study uses advanced panel data econometric tools to achieve the study's desired objectives, i.e., Pesaran second-generation unit root test, Westerlund cointegration, and cross-sectionally augmented ARDL for the period 1990–2019. Moreover, this study also added an interactive term for remittance inflow and institutional quality to see both terms' joint effect. Similarly, the role of gross domestic product and financial risk is also analyzed in this study. This study's outcomes show that increasing remittance inflow does cause Dutch disease; however, improvement in institutional quality and its joint effect with remittance inflow on private investment is positive and nullifies the phenomena of Dutch disease. Moreover, an increasing gross domestic product causes private investment to grow. On the other hand, increasing financial risk in emerging seven economies cause private investment to decline. Based on our empirical findings, this study indicates that improvement in institutional quality and channelizing inflow of remittance, and overcoming financial risk shall help promote private investment in these countries.

Finance, Institutions, and Private Investment in Africa

AbstractThis article extends the debate on finance versus institutions and measurement of property rights institutions (PRI). We assess the relationships between various components of PRI and private investment, notably: political, economic, and institutional governances. Comparative concurrent relationships of financial dynamics of depth, efficiency, activity, and size are also investigated. The findings provide support for the quality of institutions as a better positive correlate of private investment than financial intermediary development. The interaction of finance and governance is not significant in potentially promoting private investment, perhaps due to substantially documented surplus liquidity issues in African financial institutions. The empirical evidence is based on 53 African countries for the period 1996‐2010. Policy measures are discussed for reducing financial deposits, increasing financial activity, and hence, improving financial efficiency.Related ArticlesAideyan, Osaore. 2016. “Political and Institutional Prerequisites for Monetary Union: Assessing Progress in the Economic Community of West African States (ECOWAS).” Politics & Policy 44 (6): 1192‐1212. https://doi.org/10.1111/polp.12183Asongu, Simplice A., and Joseph Nnanna. 2019. “Foreign aid, Instability, and Governance in Africa.” Politics & Policy 47 (4): 807‐848. https://doi.org/10.1111/polp.12320Scarlato, Margherita, and Giorgio d'Agostino. 2019. “The Political Dimension of Cash Transfers in Latin America and Sub‐Saharan Africa: A Comparative Perspective.” Politics & Policy 47 (6): 1125‐1155. https://doi.org/10.1111/polp.12332

К вопросу об оценке государственной политики по развитию Дальнего Востока России

A brief overview of the evolution of the new public policy for the development of the Russian Far East is presented. Thanks to active federal policy, the Far East macroregion became a testing ground for new mechanisms and instruments of regional development aimed at stimulating economic growth and promoting private investment. Currently, there is no other macroregion in Russia within which all the possible investment promotion policy tools and measures are in operation. An inventory of budget expenditures (including shortfalls in income) relating to the implementation of measures to stimulate economic growth and promote private investments in the Far East of Russia is conducted. The direct results of the implemented policy (the volume of attracted investments, the number of jobs created, the volume of tax payments) are summarized. Although it is still premature to talk about the high budgetary efficiency of preferential regimes in the Far East of Russia, there is a widespread opinion among the official circles about the uniqueness of the created system for supporting the investment process. This view is primarily based on the high value of the private to public investments ratio pertaining to preferential regimes in Russia’s Far East. A comparative analysis of the performance of the key macro-indicators of the Far East economy and those of the rest of the Russian Federation is carried out for two comparable periods: five years before and five years from the beginning of the implementation of the federal policy. It is concluded that the active policy of creating favourable conditions for investment in the Russian Far East is not yet transformed into the desired pace of the socio-economic dynamics. Such a dissonance with optimistic assessments of the implemented measures and instruments introduced for the development of the macroregion prompts the question of whether the goals of public policy for the development of the Far East are consistent with the means used to achieve them. The starting point for finding an answer to this question is the difference in understanding the content of the categories ‘growth’ and ‘development’

El nuevo proyecto de Ley Orgánica de Hidrocarburos presentado por la Comisión Permanente de Energía y Minas en septiembre de 2020 (The New Daft of the Organic Hydrocarbons Law Presented by the Permanente Commission of Energy and Mines in September 2020)

The Venezuelan oil sector is facing a dilemma. The destruction of the sector and the reduced window of opportunities offered by the international market require significant investments of about one hundred (100) billion dollars in eight (8) years. These investments must be provided, at least mainly, by private investment (as the Maduro regime itself recognizes). There are two institutional alternatives to achieve this objective: the constitutional anti-blockade law and the new Hydrocarbons Organic Law. The first option, offered by Maduro, does not provide any competitive advantage in terms of certainty and protection of economic rights; thus, it is not an appropriate institutional arrangement to promote private investment. On the contrary, this option follows the same institutional arrangements that, since 2016, have promoted only weak and unstable solutions. The second option, offered by the National Assembly, provides the appropriate institutional framework to promote private investment -considering the current conditions of the international oil market and the Venezuelan oil industry. The project of Hydrocarbons Organic Law presented by the National Assembly in September 2020, introduces reasonable institutional reforms that facilitate the implementation of the new oil public policies, although the paper recommends improving the quality of some institutional reforms.

La promoción de la inversión privada en minería y su incidencia en la fiscalización ambiental en la Región La Libertad, 2018

La promoción de la inversión privada en minería y su incidencia en la fiscalización ambiental en la Región La Libertad, 2018