Public Investors Research Articles

The co-evolution of climate policy and investments in electricity markets: Simulating agent dynamics in UK, German and Italian electricity sectors

Achieving electricity sector transitions consistent with stringent climate change mitigation under the Paris Agreement requires a careful understanding both of the coordinating role of national governments and of its interactions with the heterogeneous market players who will make the low-carbon investments in the electricity sector. However, traditional energy models and scenarios generally assume exogenous policy targets and fail to capture this co-evolution between policy-makers and heterogeneous private and public investors. This paper uses BRAIN-Energy, a novel agent-based model of investment in electricity generation to simulate and contrast government and investor dynamics in the transition pathways of the UK, German and Italian electricity sectors. Key findings show that a successful transition – which achieves the energy policy “trilemma” (low carbon, secure, affordable) – requires the co-evolution of the policy dimension (strong and frequently updatable CO2 price, renewable subsidies and capacity market) with the strategies of the heterogeneous market players. If this dynamic balance is maintained then incentives are politically feasible and suppliers learn and evolve (in what we term a virtuous cycle). If either the incentives are too weak to drive learning or too expensive so the policy regime collapses, then the transition fails on one of its key dimensions (in what we term a vicious cycle). Getting this balance right is harder in risky markets that also have players with more pronounced bounded rationality and path dependence in how they make investments.

Does institutional ownership moderate the effect of intellectual capital and company value?

This study aims to empirically examine the influence of intellectual capital towards company value and also its influence while being moderated by institutional ownership. This study uses purposive sampling to determine samples from manufacturing companies listed in Indonesia Stock Exchange during the year of 2014–2018. The total sample obtained in this study is 301 from the 720 population of data throughout the research year. Data analysis techniques use multiple regression and moderated regression analysis (MRA) methods. The results of this study show that Intellectual Capital has a positive significant effect on company value while institutional ownership does not have a significant effect on moderating the influence of intellectual capital towards company value. The practical implication of this study is to provide information to managers or owners of public manufacturing companies and investors about the importance of intangible assets investment like intellectual capital as the competitive strategies to achieve more optimal company value, as well as for regulator to make clear regulations about the disclosures of intangible assets.

Study of Selected Livestock Innovations in Ethiopia

Ethiopia is endowed with significant livestock resources and holds the largest livestock population in Africa, estimated at around 60 million cattle, 60 million sheep and goats, 52 million chickens, 4.5 million camels, 10 million bee colonies and 7.2 million equines. The livestock production and management system in Ethiopia is mainly extensive, where indigenous breeds are kept under low input/low-output husbandry practices. This study is part of a multi-country African livestock innovation study covering three East and West African countries (Ethiopia, Kenya and Mali) supported by the Program of Accompanying Research for Agricultural Innovation (PARI). The purpose of the study was to provide guidance to policy makers and private and public investors on promising innovations in Ethiopian livestock value chains and their contexts, which could enable transformation of the livestock sector. The study also aimed at providing private and public decision-makers with guidance on investment opportunities building on a review of broad trends of Ethiopian livestock development and in-depth analyses of success stories from selected innovations to encourage wider lesson-learning and knowledge-sharing. The study is based on a desk review of important documents, key informant interviews, consultations with major stakeholders on respective innovations and analyses of official customs data and other data from the national statistical agency of the country. The study focused on four selected livestock innovations: beekeeping, feed production and marketing, integrated feedlot operation and index-based livestock insurance. These innovations were selected at an inception workshop held in Kenya, Nairobi, in October 2019. Results of the study reveal the possibility to increase honey production six fold through improved frame hive, from the current level of 15-20 kg/hive/year to 90-120 kg/hive/year by raising farmers’ skill and knowledge on apiary site management, and facilitating access to inputs. On the other hand, an assessment of feed innovations revealed attractive investment opportunities in the harvesting, conserving and proper utilization of crop residues, hay and other feed resources. Harvesting and conservation of crop residues alone can create employment opportunities for over 245,000 youths for two months a year. Investments in industries that produce feed premixes and additives to supply the Ethiopian livestock sector also hold promise, in light of imports over 4,000 tons of these feed ingredients per annum an. Investment in integrated feed production, feedlot operation, slaughter and export of beef is also indicated as an promising business opportunity to enhance benefits from the Ethiopian beef industry. Index-based livestock insurance is also found to be a scalable innovation in the Ethiopian livestock industry that can benefit both livestock producers and the financial sector actors. The study has shown adoption and impact, trade-offs/externalities, potential for scaling and broad policy and development implications of all the four selected livestock innovations in Ethiopia.

КИБЕРСПОРТИВНЫЕ ТУРНИРЫ КАК ФОРМА СТРАТЕГИЧЕСКОГО ПРОДВИЖЕНИЯ ТОВАРОВ И УСЛУГ

The article is dedicated to eSports as a new and promising sector of the world economy that provides businesses with effective integration scenarios. This contributes to the development of cooperation of private and public investors with eSports holdings, as well as to the involvement of the generation Z audience in promising consumption of interested companies’ products. The article examines the current trends in the development of the eSports market using analytical studies of international consulting companies. The official data characterizing the state of the eSports market in Russia are also represented. The article provides information about the model of monetization of eSports and its perspective directions. In conclusion, the article makes the necessary inferences to assess the prospects of such areas of the economy as eSports, both for the industry of interactive entertainment and for representatives of other market sectors.

Serving Multiple ‘Masters’: Evidence from the Loan Decisions of a State-Owned Publicly Listed Bank Around a Massive Economic Stimulus Programme

Using China’s 2008 four-trillion-yuan economic stimulus as a laboratory and proprietary loan data, we study how a large state-owned publicly listed bank responds to the government’s countercyclical financing initiative while being constrained by the need to cater to the bank regulator and public investors. We find that the bank exhibited little change in the process of setting internal credit ratings, and internal ratings remain a valid, albeit weaker, predictor of interest rates in the stimulus period. Weakened rating-interest rate relation is concentrated in borrowers that are state-owned enterprises or in stimulus-favored industries. Interest rates also remain a valid predictor of loan outcomes in the stimulus period. Overall, there is no systematic evidence that loan decisions of the state-owned bank are severely compromised in the stimulus period as speculated by media. The study adds to the limited understanding of how partially privatized state-owned banks operate and is relevant to the longstanding debate over the roles of state-owned banks.

Sustainability Bonds: A Mini-Review

The aim of the current study was to investigate the role of sustainability bonds in balancing stakeholders’ value of the companies worldwide. For a successful accomplishment of the research aim, a systematic review methodology was undertaken. Based on 25 research articles selected from multiple databases such as SCOPUS, EBSCOHOST and SSRN, the study reported that sustainability bonds are useful for the business organizations in different countries increased their complicated advantage in front of the stakeholders. However, at present, the focus of the public and private investors is on the environmental dimensions set as the primary objective behind investigate the sustainability bonds. Despite, sustainability bonds are used by the business organizations for offering social impacts in different sectors such as early childhood education, affordable housing, education, food security and healthcare accessibility. The study suggests the need to enhance policy and standards to guide the business organizations towards the effective and beneficial use of sustainability reports for all the stakeholder groups respectively.

КОМПАРАТИВНЫЙ АНАЛИЗ ВОЗДЕЙСТВИЯ ТРАНСПОРТНОЙ ИНФРАСТРУКТУРЫ НА ЭКОНОМИКУ И УКРЕПЛЕНИЕ ТРАНЗИТНОГО ПОТЕНЦИАЛА СТРАНЫ

The article is devoted to the study of modern factors of the influence of transport infrastructure on the formation of the economy, including in the context of transit transport. The research is based on general scientific methods of cognition (analysis, synthesis, comparison). Based on the research, the author concludes that: transport infrastructure is a necessary and important element both in the production (provision) of transport services, and a significant factor in the functioning of all sectors of the economy, including investment activities, the creation of new transport systems and technologies, thereby contributing to the change in the economic geography of states. It has a central role in the economy, since it, in fact, being its basis, affects all economic processes; infrastructure investment is a key driver of productivity in the transport sector, and the growing interaction between public and private investors adds complexity to measuring the results. In addition, the lack of clear definitions and common practices makes meaningful analysis difficult, which can lead to inaccuracies in decision-making; The fragmented scientific content of the concept of transport infrastructure requires understanding through the prism of an economic and applied approach, the indicator of which in this context is the transit potential of the state, which has a significant impact on its global economic relations, but, unfortunately, is not used in the Russian Federation to the full. As a result of a comprehensive analysis, the paper substantiates the need for a wider use of modern scientific approaches that take into account advanced transport technologies for cargo delivery, including the simplification of foreign trade processes, which will improve the quality of transport services provided and, as a result, increase the capacity and carrying capacity of the state's transport system and its transit potential.

Reframing Related Party Transactions in China's State-Owned Enterprises

This paper analyzes understudied aspects of related party transactions (RPTs) in China’s state-owned enterprises (SOEs). This paper defines the government as an “institutional controlling shareholder” of SOEs. In addition, this paper examines two types of RPTs in the SOE sector: “corruption-RPTs” and “policy-RPTs.” Corruption-RPTs are those associated with tunneling for the personal greed of SOE executives and party-government officials. Thus, from the standpoint of public investors, corruption-RPTs are always detrimental and generate cash-outflow wealth-transfers. Policy-RPTs are conducted by the government as a means of enacting public policy. In contrast to corruption-RPTs, policy-RPTs are associated with two opposite concepts—“institutionalized tunneling” (in favor of the controlling shareholder of SOEs, the government) and “propping” (to the detriment of the government). Although it is well known that investors in China are subject to the problem of insufficient investor protection, this paper finds that investors can sometimes benefit from policy-RPTs (e.g., investors of a propped SOE). Besides, this paper demonstrates that SOEs gain a variety of additional benefits from government policies in China that favor the financial interests of SOE investors. Accordingly, this paper shows that investors in Chinese SOEs are, to some extent, compensated and protected by an informal, extra-legal investor-protection mechanism. Moreover, this paper explores an overlooked topic in China’s SOE sector—how the political motivations of SOE executives and party-government officials function in the context of RPTs.

Illiberal Governance and the Rise of China's Public Firms: An Oxymoron or China's Greatest Triumph?

The early 21st century will be remembered for its shift in global economic power dynamics. In the past two decades, the Chinese government has fostered the growth of many of the world’s most valuable firms, advanced complete integration of Chinese companies in global supply chains, and positioned its firms as key players in cross-border infrastructure and investment transactions. Perhaps even more striking is the speed of China’s capital market growth. It took merely three decades for China’s capital market to advance as the world’s second most meaningful market. Chinese firms—many of which are subject to an illiberal, political governance—are increasingly integrated with global financial markets, attracting domestic and foreign public investors. Neither state ownership and control, political influence, or weakly functioning legal institutions stand in the way of these firms’ access to capital. Such reality challenges law and development theories and notions of corporate governance best practices. This Article discusses the puzzling allure of Chinese public firms to external suppliers of capital while illuminating the functions of illiberal governance through the Chinese state’s and Communist Party capacities within firms. It argues that Chinese public firms were able to grow and expand, attracting external finance, not despite the function of “bad” corporate governance institutions but because of them. The Article shows how alongside its many obstructions, China’s illiberal governance system plays an important role in promoting market regularity, providing investors with the assurances necessary to secure the flow of external finance. Against the backdrop of the U.S.-China trade war and calls for economic decoupling, policymakers are trying to comprehend the various implications of China’s rising powers while considering appropriate regulatory and policy responses. Yet while aspects of trade, national security, and labor carry the headlines, corporate governance is largely missing from the discussion. Only now, as a result of escalating geopolitical wariness, Congress and the SEC (Securities and Exchange Commission) have extended efforts to grapple with corporate governance aspects as well. This Article supports such recent intentions. It examines the implications of China’s illiberal corporate governance for global investors and assesses recent policy developments while pointing to the potential fallacies of adhering to conventional notions of corporate ownership and control. * Please refer to the published Article for the final version.

Illinois Teachers' Retirement System, 2019: Private Equity Performance

Cinda Klickna, trustee of the State of Illinois Teachers' Retirement System (TRS), was preparing to vote in June 2019 on a proposed $75 million investment in a new fund being raised by First Light Capital (FLC), a midsized buyout firm. Illinois had been under financial pressure for some time, and TRS, the state's largest public pension, was seriously underfunded. In 2012, TRS's board began a plan to strategically increase its allocations to private equity (PE). By 2018, the target allocation to PE had reached 15%, well above the 10% average of other public pensions. The increase in PE was undertaken in an attempt to close the funding gap necessitated by insufficient state funding and the generally low-interest-rate environment. The strategy had not gone unnoticed, and many now openly questioned the higher risk and costs of these investments. In the face of this greater scrutiny, Klickna believed it was important that the pension's PE investments earn a satisfactory return, by looking to invest in funds that had upper-quartile returns and public market equivalents (PMEs) greater than one.This case is appropriate for courses that cover PE investments, such as those typically covering topics on venture capital or PE, or courses on asset management that include alternative assets. It introduces students to some of the commonly used PE performance metrics and the challenges associated with measuring performance for an illiquid asset class. Students are introduced to the Global Investment Performance Standards (GIPS) and their purposes and limitations in evaluating performance. Students are asked to calculate the gross and net since-inception internal rate of return (SI-IRR), DPI, RVPI, TVPI, and PME for the same pending investment in FLC Fund IV and compare how performance is assessed across these metrics. The case also discusses the push for greater disclosure in the PE industry as it grows in its influence and public investors seek to know more about its performance. Excerpt UVA-F-1952 Jul. 6, 2020 Illinois Teachers' Retirement System, 2019: Private Equity Performance Cinda Klickna, former president of the Illinois Education Association, the state's largest teachers' union, and trustee of the State of Illinois Teachers' Retirement System (TRS), had grown frustrated with discussions about the “new reality” regarding teachers' pension benefits. Over the past decade, the benefits promised to public-sector employees and teachers had come under increased scrutiny as states struggled to meet their fiscal obligations. Illinois had been under financial pressure for some time, and TRS was seriously underfunded. In 2012, the board began a plan to strategically increase its allocations to private equity (PE). By 2018, the target allocation to PE had reached 15%, well above the 10% average of other public pensions. The increase in PE was undertaken in an attempt to close the funding gap necessitated by insufficient state funding and the generally low interest rate environment. The strategy had not gone unnoticed: many now openly questioned the higher risk and costs of these investments. In the face of this greater scrutiny, it was imperative that the fund's PE investments earned a satisfactory return. As a member of the board, Klickna voted on all new investments, and at an upcoming meeting in June 2019, the board was scheduled to vote on whether to invest $ 75million in a new fund being raised by First Light Capital. Klickna believed her role on the board was to advocate for the benefits promised to teachers. In preparing for the upcoming meeting, she would review her understanding of performance assessment in PE and examine the materials for the proposed investment. . . .

What Is a Patent Worth? Evidence from the U.S. Patent “Lottery”

ABSTRACTWe provide evidence on the value of patents to startups by leveraging the quasi‐random assignment of applications to examiners with different propensities to grant patents. Using unique data on all first‐time applications filed at the U.S. Patent Office since 2001, we find that startups that win the patent “lottery” by drawing lenient examiners have, on average, 55% higher employment growth and 80% higher sales growth five years later. Patent winners also pursue more, and higher quality, follow‐on innovation. Winning a first patent boosts a startup’s subsequent growth and innovation by facilitating access to funding from venture capitalists, banks, and public investors.

Examining the decreasing share of renewable energy amid growing thermal capacity: The case of South America

Concerns about climate change have required energy policy to be reconsidered around the world. The transition from fossil fuels to renewable energy has the potential to contribute significantly to the goals of the Paris Agreement (2015), particularly in the developing world. The recent evolution of total installed capacity of electricity mix in eight South American countries and the current renewable energy policy is considered. Indications of an energy paradox are seen: the installed share of thermal capacity increases as energy demand grows, decreasing the share of renewable energy despite the government's stated policy and commitment to increasing renewables in electricity generation through incentives and regulations. The share of installed hydro compared to thermal generation declined from 2007 to 2017 in Chile, Peru, Brazil, Argentina and Bolivia. Furthermore, South American countries are unlikely to reach the aforementioned share of renewables in the energy matrix, with the exception of Uruguay. Thus, organic growth of renewables may not be enough in a region with high potential and a long history of low emissions from electricity. It may be necessary for governments to more actively prioritize, regulate, and support inclusive subsidies for both public and private investors in the electricity sector to reduce the risk of climate change and achieve greenhouse gas reduction goals.

Public- Private Partnership: Reconciling Mainstream and Islamic Finance in sub-Saharan Africa

ABSTRACT Can conventional private participation in infrastructure incorporate Islamic finance requirements? Sub-Saharan Africa has substantial infrastructure-funding needs, but it is challenging to attract capital using conventional solutions, given the governing requirements of Islamic finance. In a comparative model setup, I indicate the conditions under which public–private partnerships (PPPs) are a viable organizational form of financing public services. I point out the trade-off conditions under which private and public investors reach their expectations of maximizing profit and providing social benefits simultaneously. Based on the observed socio-economic trends, conventional–Islamic PPPs can enable public services’ development with a strong emphasis on social welfare.

Оценка стоимости земли как фактор софинансирования проектов развития городов и территорий

<span>В статье рассмотрены некоторые условия реализации градостроительных инициатив на основе государственно-частного партнерства. Показано, что современная политика взаимодействия государства и бизнеса должна учитывать многосубъектный характер отношений собственности. Рассмотрен институт оценки стоимости, который широко используется за рубежом (и пока эпизодически в России) для привлечения частных средств в инфраструктурные, градостроительные проекты и оценки их эффективности. Описан механизм целевого софинансирования государством и частными инвесторами градостроительных мероприятий, с использованием института оценки, приведены зарубежные и отечественные кейсы, демонстрирующие некоторые особенности его практического применения. Выделена роль специализированных обществ проектного финансирования как относительно нового правового элемента реализации инфраструктурных проектов.</span>

Comparative Analysis on the Flow-Performance Relationship between Public Equity and Fiduciary Pension Funds

This study analyzes the flow-performance relationship and the convexity of public equity and fiduciary pension funds in Korea from January 2003 to May 2016. The empirical implications are as follows: First, as shown in the literature, a statistically significant positive correlation exists between cash flows and the performance of public equity and fiduciary pension funds. Second, flow-performance convexity is found for public equity funds but not for fiduciary pension funds. This may be due to the difference in investor characteristics between the public equity and fiduciary pension funds, rather than the difference in investor taxability, as, unlike in the US, Korean public equity fund investors are exempt from capital gain taxes. Key words: Public Equity Funds; Fiduciary Pension Funds; Performance; Flow; Convexity JEL Classification: G10, G20

Addressing the Auditor Independence Puzzle: Regulatory Models and Proposal for Reform

Auditors play a major role in corporate governance and capital markets. Ex ante, auditors facilitate firms’ access to finance by fostering trust among public investors. Ex post, auditors can prevent misbehavior and financial fraud by corporate insiders. In order to fulfill these goals, however, in addition to having the adequate knowledge and expertise, auditors must perform their functions in an independent manner. However, auditors are often subject to conflicts of interest, for example, resulting from the provision non-audit services, but also because of the mere fact of being hired and paid by the audited company. Therefore, even if auditors act independently, investors may have reason to think otherwise. Policymakers and scholars around the world have attempted to solve the auditor independence puzzle through a variety of mechanisms, including prohibitions and rotation requirements. More recent proposals have also included breaking up audit firms and the empowerment of shareholders. This paper argues that none of these solutions is entirely convincing. Drawing from the corporate governance, law and economics, and accounting literatures, we propose a new model to solve the auditor independence puzzle. Our proposal is based on four pillars. First, we argue that, in the context of controlled firms, auditors should be elected with a majority-of-the-minority vote. Second, while auditors in many jurisdictions are subject to certain temporal prohibitions to be hired by previous clients, we propose that the length of these temporal prohibitions should be extended. Moreover, regulators should also restrict the type of services potentially provided to the audit client. Third, policymakers must pay closer attention to the internal governance and compensation systems of audit firms. We argue that increased transparency of audit firms is essential to enhance the independence of auditors. Finally, studies have shown that audit committees often fail to perform their monitoring functions, a major reason being the influence of corporate insiders on the committee. For this reason, we propose to increase the power and presence of public investors in the audit committee.

Towards corporate transparency

PurposeThe purpose of this paper is to determine whether companies recognised for the quality of their sustainability reporting are also adopting investor relations (IR) best practices for their IR webpages. Quality communications to all stakeholder groups may then speak to organisational transparency and integrated corporate communication management (CCM).Design/methodology/approachAn ordinary least squares regression model was developed to test the hypothesis that companies with quality sustainability reporting also adopts best practices in online IR. Sustainability reporting quality was signalled by inclusion of the company in a socially responsible investment (SRI) index. IR quality was proxied by disclosure scores compiled from content analyses of investor relations webpages.FindingsThis study find that inclusion in the SRI Index was positively and significantly associated with online IR quality, while controlling for other variables associated with voluntary disclosure behaviour.Practical implicationsFor retail and institutional investors in SRI Index companies, cost of information discovery is reduced as they can use the investor relations webpages as comprehensive source.Originality/valueThis study contributes to the literature on corporate transparency by operationalising reporting “transparency” in that it considers the combined communications output to both financial and non-financial stakeholder groupings. A 2 × 2 conceptual framework for corporate disclosures is proposed that reconciles legitimacy theory and voluntary disclosure theory as motivations. It also contributes to the paucity of research on the links between public relations and investor relations in corporate communications by demonstrating a joint contribution to transparency.

Testimony of Jesse M. Fried on Stock Buybacks Before the U.S. House of Representatives Subcommittee on Investor Protection, Entrepreneurship, and Capital Markets

This statement presents my views on buybacks and my general reactions to provisions in four pieces of legislation relating to stock buybacks. Part I describes the role of stock buybacks in the economy and offers some “investor-benign” explanations for firms’ use of repurchases rather than dividends to distribute cash to investors. Part I then explains that the overall level of shareholder payouts (that is, the total amount of dividends and repurchases) does not appear to be too high; in fact, it may well be too low. Part II describes the current regulation of buybacks, which I believe is too lax and enables their abuse by corporate executives. In particular, I will explain how current regulation can enable executives to use buybacks to enrich themselves at the expense of public investors, through (1) indirect insider trading, (2) the manipulation of the stock price and EPS metrics in compensation arrangements, and (3) “false signaling:” announcing repurchases that executives do not intend to carry out, solely to boost the stock price before executives unload shares. Part III suggests a disclosure rule that would reduce executives’ ability to engage in the above-mentioned abuses, and therefore, better protect public investors: requiring public firms (like their insiders) to disclose trades in firm stock within two business days. I also describe additional measures that could be taken if this disclosure rule turns out be insufficient. Part IV offers initial reactions to key provisions in these four pieces of legislation.

ДОСВІД ВИКОРИСТАННЯ ІНВЕСТИЦІЙНИХ МЕХАНІЗМІВ ДЕРЖАВНОГО РЕГУЛЮВАННЯ РЕГІОНАЛЬНИХ СТРУКТУРНИХ ТРАНСФОРМАЦІЙ В АГРОБІЗНЕСІ

Introduction. The article substantiates the important role of the state in the regulation of invest-ment mechanisms for the development of regional structural transformations in agribusiness. The modern development of agribusiness at all levels cannot be effectively implemented in the face of significant transformational changes, global challenges and complex economic environment. Agribusiness entities need state-level support for the investment providing of reproduction processes in order to enhance their competitiveness, which will have a positive impact on all other related industries. The purpose of the article is to study the experience of using the state regulation mechanisms of the development of regional structural transformations in agribusiness. Results. The investing efficiency in agribusiness is achieved only under the conditions of action rationality of the activation instruments complex of entrepreneurial activity, both in the field of agrarian production, in related industries, as well as in the activity of private and public investors. The tools of business activation and the means of their use, a set of prerequisites and the driving factors for attracting / investing in the agro-sphere form the basis of the organizational and economic mechanism of investment activity development in the region agribusiness. In order to develop and implement an effective mechanism and determine the set of its necessary levers and tools, it is need to investigate in detail the object to which this mechanism is aimed – investment activity in the agro-sphere of a particular region, to identify their peculiarities, conditions and factors of positive and negative impact on the investment potential and o enterprise activity and organizations of the agro-sphere, to develop a conceptual model of the mechanism of investment activity development in the region agribusiness. Conclusions. In order to create a favorable investment climate in the agricultural sector, it is necessary to ensure a stable economic and political situation; development of a science-based market reform strategy; availability of appropriate legal framework. Real priority should be given to the development of agriculture and agro-industrial production; effective functioning of the agricultural market infrastructure; overcoming inflationary processes and corruption and shadowing the economic sphere. Important steps in this direction will be to curb the growth of external public debt and to restructure payments for its servicing; establishing clear mechanisms for regulating international investment cooperation; strengthen regional policy activity; to create modern information and methodological support for investment activities. Key words: evaluation, investment, regulation, investment mechanism, regional development, investment attraction, government support, agribusiness.

Supporting pathways to prosperity in forest landscapes – A PRIME framework

Abstract We develop a framework to conceptualize the multiple ways forests contribute to poverty reduction and inform development interventions in forest landscapes. We identify five key strategies for reducing poverty in forest landscapes: a) improvements in productivity (P) of forest land and labor; b) governance reform to strengthen community, household and women’s rights (R) over forests and land; c) investments (I) in institutions, infrastructure and public services that facilitate forest-based entrepreneurship; d) increased access to markets (M) for timber or non-timber forest products; and e) mechanisms that enhance and enable the flow of benefits from forest ecosystem services (E) to the poor. We test the utility of the framework through a review of the forestry portfolio of the World Bank Group, the largest public investor in forestry. Many of these projects include several, but not all, PRIME components. We devote particular attention to forest-related investments in two contrasting countries, Vietnam and Mexico, to examine synergies among the pathways. Results suggest that each strategy in the PRIME framework may play an important role in alleviating poverty, but pronounced impacts may require multiple pathways to be jointly pursued. The PRIME framework can guide research to address knowledge gaps on pathways to prosperity in forest landscapes, serve as an easily remembered checklist for managers, and nudge forest program designers in government and development organizations, who are interested in poverty reduction, to focus on the importance of both a comprehensive framework and synergies across different pathways.