Private Investment in Developing Countries
Author | : International Monetary Fund |
Publisher | : International Monetary Fund |
Total Pages | : 30 |
Release | : 1990-04-01 |
ISBN-10 | : 9781451977028 |
ISBN-13 | : 1451977026 |
Rating | : 4/5 (28 Downloads) |
Book excerpt: This paper analyzes the effects of several policy and other macro-economic variables on the ratio of private investment to GDP in developing countries. Using data for a sample of 23 developing countries over the period 1975-87, the econometric evidence indicates that the rate of private investment is positively related to the real growth rate of GDP, public sector investment, and to a lesser extent the level of per capita GDP, while it is negatively related to domestic inflation, the debt service ratio, the debt-to-GDP ratio, and high real interest rates. There is also some indication that all but the last of these variables had a greater impact before the onset of the debt crisis in 1982, while the debt-to-GDP ratio (a measure of a country’s debt overhang) has become more important since then.