Investment Matters: The Role and Patterns of Investment in Southeast Europe

Contents......Page 4
Acknowledgments......Page 6
Acronyms and Abbreviations......Page 8
1. Introduction......Page 10
The Contribution of Investment and Productivity Improvements to Output Growth......Page 12
Investment as Driver of Productivity......Page 14
Private Capital Formation in SEE......Page 16
Figure 5. GFCF in Machinery and Equipment in Some of the EU-10......Page 19
Table 3. Difference Between the Share of Investment and Share of Value-Added for NACE Sectors......Page 21
The Link Between Savings and Investment......Page 26
The Role of the Financial Sector......Page 27
Remittances as a Source of Investment......Page 30
5. The Role of Foreign Investment for Domestic Capital Formation......Page 32
Figure 10. FDI by Sector in the EU......Page 34
6. Public Investment Can Fuel Private Investment......Page 38
Public Infrastructure in SEE......Page 39
Figure 13. Impact of Infrastructure Improvements on Productivity Growth......Page 41
Box 3. PPPs in the Case of Croatia......Page 42
7. Conclusions......Page 44
References......Page 46
Table 2. GDP Structure (NACE) of the SEE Economies......Page 20
Table 4. Increase in Sector Labor Productivity Compared to the Average, and Sector Investment Per Employee Compared to the Average......Page 23
Table 5. Sources of Financing of Investment......Page 28
Figure 11. Greenfield FDI in Selected Transition Economies......Page 35
Table 7. FDI Stock in SEE by Country as Percent of Total Stock......Page 36
Figure 12. Government Capital Expenditure in the EU-10......Page 40
Box 1. Macroeconomic Framework......Page 13
Figure 3. Private GFCF in SEE......Page 17
Figure 4. Private GFCF, including Change in Inventory......Page 18
Figure 6. Investment and Output Growth in SEE by Sector......Page 22
Box 2. Investing in High Technology and R&D......Page 24
Figure 8. Private Investment and Credit and Annual Changes in Investment and Credit in SEE (2002–06)......Page 29
Figure 9. FDI in SEE......Page 33