Trends In Private Investment In Developing Countries 1995 Statistics For 1980 93

IFC Discussion Paper No. 25. Presents tables and graphs of updated statistics on private investment in developing countries between 1980 and 1993. Text focuses on capital flows that contribute to the financing of private investment. This six

This fifth edition of Trends in Private Investment in Developing Countries provides private and public investment data from 1970 through 1992. The Discussion Paper also includes aggregate data on net foreign direct investment and a brief discussion of the effects of recent privatization activities on private investment flows.

This discussion paper examines in its first part, the role of private investment in economic growth. While theoretical growth models developed in the economics literature, make no distinction between private, and public components of investment, there is an emerging appreciation that private investment is more efficient, and productive tan public investment. Results from the recent empirical literature, updated here with the recent data on private investment, suggest that private investment has a stronger association with long run economic growth than public investment. The second part shows trends in private, and public fixed investment in fifty developing countries. On average, the ratio of private investment to GDP continued its upward trend, reaching record levels in 1998, the most recent year for which comparable data exist. That year, average private investment reached 14.3 percent of GDP, but public investment, fell to only 7.0 percent of GDP, its lowest level since 1974.

This short paper, in its eighth edition, provides private and public investment data through 1995. Although the growing empirical literature on privatization has almost invariably found that the transfer of assets from public to private hands yields both efficiency and welfare gains, there has been a surprising lack of research on the macroeconomic consequences of privatization. This report addresses that issue briefly, exploring the impact of privatization on private fixed investment. As a starting point, the dimensions of the privatization revolution are summarized with special emphasis on the contribution made by foreign investors. Data on investment commitments stemming from privatization are also presented. The final section offers some econometric insights into the importance of privatization as a determinant of private investment in developing countries. The report concludes that privatization of state-owned enterprises is likely to have a multiplier effect on private investment and is, therefore, an important ingredient of governments' efforts to improve the business climate and to step up the pace of economic development. Appendix 1 discusses the methods and sources used; Appendix 2 presents tables with investment figures in terms of five ratios; Appendix 3 graphs the data by region; and Appendix 4 discusses the econometric results.

Private investment in developing countries continued its upward trend in 1996, the most recent year for which data exist, on an unweighted average basis. Public investment rates continued a decline that began in the early 1980s. The largest increases in private investment between 1995 and 1996 occurred in Malawi, Mauritania, Benin, Papua New Guinea, and Bolivia, suggesting that the private firms in some of the world's poorest countries are showing a strong supply response. This year's edition includes statistics for four major Organization for Economic Co-operation & Development (OECD) countries for comparison with developing country trends. It also includes a discussion of domestic capital markets in financing private investment; even though stock and bond markets have grown at a rapid rate, they play only a minor role in financing investment in the developing countries where banks are a more important source of financing.

La edicion de 2001 se centra en la relacion entre inversion publica e inversion privada. El foco de este a?o esta en la calidad de la inversion publica, de su interaccion con la corrupcion, y del impacto que resulta en la inversion privada.

This is the tenth annual edition of "Trends in Private Investment in Developing Countries." To mark this event, this report includes figures for each of the countries for which data are available as well as the first country-specific results of a worldwide survey on obstacles to doing business perceived by executives in 74 countries (including several industrial countries for comparison). The first part of this report documents trends in private and public fixed investment. The second part presents country-specific results of a 1996/97 worldwide survey of business executives. The discussion focus on obstacles to doing business and their relationship to levels of private investment. A few factors emerge as being of particular importance to private investment decisions:the real exchange rate, the rule of law, predictability of judiciary systems, and the extent to which financing is available to enterprises.