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Investment growth in emerging market and developing economies has slowed sharply since 2010. This paper presents a comprehensive analysis of the causes and implications of this slowdown and presents a menu of policy responses to improve investment growth. It reports four main results. First, the slowdown has been broad-based and most pronounced in the largest emerging markets and in commodity exporters. Second, it reflects a range of obstacles: weak activity, negative terms-of-trade shocks, declining foreign direct investment inflows, elevated private debt burdens, heightened political risk, and adverse spillovers from major economies. Third, by slowing capital accumulation and technological progress embedded in investment, weak post-crisis investment growth has contributed to sluggish growth of potential output in recent years. Finally, although specific policy priorities depend on country circumstances, policymakers can boost investment both directly, through public investment, and indirectly, by encouraging private investment, including foreign direct investment, and by undertaking measures to improve overall growth prospects and the business climate.

Developing Economies --- Emerging Markets --- Fiscal Policy --- Infrastructure Investment --- Investment Slowdown --- Monetary Policy --- Policy Space --- Structural Reforms

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Jim Yong Kim, President of the World Bank Group, is inspired by Belt and Road Initiative, which will improve trade, infrastructure, investment, and people-to-people connectivity - not just across borders, but on a trans-continental scale. It has the potential to lower trade costs, increase competitiveness, improve infrastructure, and provide greater connectivity for Asia and its neighboring regions. To ensure the Belt and Road Initiative's success, we need to remember these things: First, because of the Initiative's sheer size, the estimated investment needs will be large. Second, individual countries are at different stages of development, with varying capabilities, constraints, and risk profiles. They will need support mechanisms to define and meet consistent, satisfactory standards. Third, the benefits of the Belt and Road Initiative are broader than one project or one country. Projects will require innovative financing mechanisms - a mix of public and concessional finance and commercial capital. Finally, our decades of experience with large infrastructure projects suggest that project preparation and appropriate risk allocation will be critical for success.

Infrastructure Economics and Finance --- Infrastructure Finance --- Infrastructure Investment --- Ports --- Private Sector Development --- Regulatory Reform --- Roads --- Roads and Highways --- Trade --- Trade Policy --- Transport --- Transport Costs