DOI: 10.32609/j.ruje.11.134875

Authors: Mayya V. Dubovik, Irina P. Komarova, Dinh Trong An

Abstract: After each economic crisis, such as the recent COVID-19 pandemic, governments have used public investment as a crucial tool to help economies recover quickly. However, a significant concern is how to structure such investments to meet the intended objectives while avoiding risks during implementation. The crowding-in/out effect of public investment on private investment remains a hotly debated topic. To address this issue, the study utilized data from 63 provinces in Vietnam over the period from 2000 to 2023. Through the use of the Cross-Sectionally Augmented Autoregressive Distributed Lag model (CS-ARDL) model and robustness checks using the Fully Modified Ordinary Least Squares (FMOLS) and Dynamic Ordinary Least Squares (DOLS) models, the research demonstrated that public investment has a crowding-in effect on private investment in the long term. Furthermore, the study identified two main causes of public investment crowding out private investment: first, when public investment exceeds the production capacity of the economy, and second, when public investment is inefficient. This conclusion is drawn from the analysis of the Russian economy. Additionally, the study employed the dynamic panel threshold model and found that if the ratio of public investment to GDP in Vietnam exceeds 8.532%, the crowding-out effect on private investment will occur. Moreover, the research also assessed the effectiveness of public investment in the context of climate change to identify shortcomings that need to be addressed immediately. These findings serve as important bases for proposing measures to improve the efficiency of public investment and avoid the crowding-out effect on private investment.

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DOI: 10.32609/j.ruje.10.127850

Authors: Maria S. Lymar, Alexander A. Reentovich, Andrey A. Sinyakov

Abstract: We study the situation when a commodity-exporting economy is under sanctions and cannot use its accumulated fx-reserves or attract new fx-debt to smooth import restrictions amid slower decline of income flow from a commodity-export. Our study attempts to determine the adequate response of the economy, depending on assumptions about the possibilities of import substitution within a structural dynamic general equilibrium model calibrated on Russian data. We use a modified version of the Ramsey–Cass–Koopmans’ model to evaluate aggregate and structural changes in the economy in the shorter and longer run. We consider several scenarios with different assumptions about the efficiency of import substitution, which is defined along two dimensions (for consumers as well as for producers). The results show that trade restrictions make import substitution optimal, but only in those sectors where such substitution is relatively more effective. Limited labour resources in the economy are compensated with higher capital intensity of production in the optimistic and neutral scenarios. Reallocation of resources to build up the necessary capital intensity calls for temporarily higher saving rates. As a result, GDP may be higher, but consumption may be lower comparing to the baseline. The results mean that effectiveness of import substitution should be taken into account in decision making on industrial policy. If efficiency of import-substitution is asymmetric and biased to goods for final consumption relative to goods for investments, the structure of imported goods becomes biased to the latter. The results imply higher relative price of consumer goods.

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DOI: 10.32609/j.ruje.10.105745

Authors: Tijani Forgor Alhassan, Eugenia Owusu Ansah, Shakizada U. Niyazbekova, Tatiana K. Blokhina

Abstract: This study outlines the features of financing investment development in Sub-Saharan African countries. Using the financial determinants of GDP, a model was developed based on the method of least squares employing data covering 2004–2018. It was revealed that a positive correlation exists between economic growth and bank loans as well as official development assistance. The results of the model indicate that bank loans and remittances significantly increase economic growth. However, both foreign direct investment and official development assistance (ODA) were found to be ineffective in promoting development, and this is attributable to its investment model (resource-seeking) and the conditions under ODA financing, respectively, in the region. Bank loans were found to be the most influential in promoting sustainable growth in the region. Hence, it is instructive that the reforms are needed and incentives are to be developed to improve the level of the region’s financial and banking sector development and facilitate the sustainable socioeconomic development of these economies.

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DOI: 10.32609/j.ruje.9.98252

Authors: Dani Rahman Hakim, Eeng Ahman, Kusnendi Kusnendi

Abstract: This study performed a meta-regression analysis (MRA) to reexamine the effect of foreign direct investment (FDI) on the host countries’ employment. We detected a publication bias and heterogeneity between studies by employing 61 publications with 477 estimates as the dataset. Studies that do not control for endogeneity suffer an upward publication bias. In contrast, we found a downward publication bias in the studies that control endogeneity. After correcting that bias, we found a small positive effect of FDI on the host countries’ employment as the genuine effect. By using the Bayesian Model Averaging (BMA) analysis, we found six moderator variables that could explain heterogeneity. These moderator variables are related to the FDI and employment measurement type, data characteristics, FDIreceiving countries, and estimation methods.

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DOI: 10.32609/j.ruje.6.48556

Authors: Sharofiddin Ashurov, Anwar Hasan Abdullah Othman, Romzie Bin Rosman, Razali Bin Haron

Abstract: Foreign direct investment (FDI) is viewed as one of the most crucial forms of capital inflows and significant drivers of economic growth in numerous countries. In particular, developing countries, emerging economies and countries engaged in the process of development have recognized the crucial importance of FDI as a critical contributor to their economic progress and increasing economic opportunities. The following research investigated and identified the determinants of FDI in the Central Asian countries, specifically Tajikistan, Kazakhstan, Kyrgyzstan, Turkmenistan and Uzbekistan, between 2000 and 2017. The methodology employed in the first part included comparative analysis of the foreign investment trends and gross domestic product (GDP), as well as an endogenous growth model. The result showed that five variables are robustly significant of FDI determinants: FDI (previous year), GDP, labor force, trade openness and tax. Additionally, this paper demonstrates that among the most significant FDI contributors are China, Russia and Japan as well as European countries because of the economic opportunities available; however, the USA is considered by Central Asian countries to offer the most opportunities for security control considerations rather than economic opportunities. Furthermore, the results suggest that the authorities in the Central Asia region should enhance the stability of their economic growth, labor force, trade openness and tax regulations to attract more FDI to the region.

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DOI: 10.1016/j.ruje.2016.08.001

Authors: Natalya Akindinova, Yaroslav Kuzminov, Evgeny Yasin

Abstract: This article explains the main stages and results of economic development in Russia since the early 1990s. It describes the process of the formation and the basic features of a three-sector economic model, as well as the reasons for its stability and existing constraints on economic growth. The authors consider the most likely scenario for the evolution of the current economic model under steadily declining export revenues. They also investigate fiscal and social risks and alternatives in economic policy.

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