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This note examines the efficiency gains that might result from market-based debt reduction and alternative uses of resources. It is argued that when a country’s expected output falls short of contractual claims on that output, private investment is drawn to activities that protect the investors’ share of future output at the expense of activities that increase future output. Resources provided by a third party could reduce this gap through market-based debt reduction or by supporting government investment or consumption. Given considerable uncertainty about the efficiency returns of alternative uses of resources, it seems likely that an optimal strategy would include both debt reduction and government investment.

Currency --- Debt Management --- Debt reduction --- Debt --- Debts, External --- Finance --- Financial Risk Management --- Foreign Exchange --- Foreign exchange --- Institutional arrangements for revenue administration --- National Government Expenditures and Related Policies: Infrastructures --- Other Public Investment and Capital Stock --- Public finance & taxation --- Public Finance --- Public investment spending --- Public investments --- Real exchange rates --- Revenue --- Sovereign Debt --- Taxation, Subsidies, and Revenue: General

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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.

Banks and Banking --- Capacity --- Capital --- Debt service ratios --- Debt service --- Debts, External --- Expenditure --- Exports and Imports --- External debt --- Finance --- Financial services --- Intangible Capital --- Interest rates --- Interest Rates: Determination, Term Structure, and Effects --- International economics --- International Lending and Debt Problems --- Investment --- Investments: General --- Macroeconomics --- National accounts --- National Government Expenditures and Related Policies: Infrastructures --- Other Public Investment and Capital Stock --- Private investment --- Public finance & taxation --- Public Finance --- Public investment spending --- Public investments --- Real interest rates --- Saving and investment --- Bolivia

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This volume, edited by Said El-Naggar, examines the impact of macro- and microeconomic policies on the investment climate in the Arab countries, the efficiency of public investment, and the role of foreign direct investment.

Investments --- Investments, Foreign --- Capital exports --- Capital imports --- FDI (Foreign direct investment) --- Foreign direct investment --- Foreign investment --- Foreign investments --- International investment --- Offshore investments --- Outward investments --- Capital movements --- Investing --- Investment management --- Portfolio --- Finance --- Disinvestment --- Loans --- Saving and investment --- Speculation --- Government policy --- E-books --- Corporate Finance --- Exports and Imports --- Investments: General --- Macroeconomics --- Public Finance --- National Government Expenditures and Related Policies: Infrastructures --- Other Public Investment and Capital Stock --- Investment --- Capital --- Intangible Capital --- Capacity --- International Investment --- Long-term Capital Movements --- Public Enterprises --- Public-Private Enterprises --- Nonprofit Organizations and Public Enterprise: General --- Public finance & taxation --- Civil service & public sector --- Public ownership --- nationalization --- Public sector --- Public investment and public-private partnerships (PPP) --- Public investment spending --- Investment policy --- Balance of payments --- Economic sectors --- Expenditure --- National accounts --- Finance, Public --- Public-private sector cooperation --- Public investments --- Egypt, Arab Republic of --- Nationalization