Explaining Recent Investment Weakness: Causes and Implications

Ergys Islamaj, M. Ayhan Kose, Franziska Ohnsorge, Lei Sandy Ye

    Research output: Contribution to journalArticle

    Abstract

    This article investigates the drivers of investment growth in emerging market and developing economies with a focus on the most recent slowdown over the 2010-2015 period. Using panel regression techniques, we find that the recent investment slowdown in emerging market and developing economies is associated with a range of obstacles: weak economic activity, negative terms-of-trade shocks, declining foreign direct investment inflows, elevated private debt burdens, and heightened political risk. This stands in contrast with advanced economies, where weak economic activity is the most important factor. We briefly discuss policy implications of our findings.
    Original languageEnglish
    Pages (from-to)1709-1721
    JournalEmerging Markets Finance and Trade
    Volume55
    Issue number8
    DOIs
    Publication statusPublished - 2019

    Cite this