Investment shortfalls around the world

http://www.spiegel.de/international/business/a-new-plan-to-boost-european-investment-to-avoid-recession-a-978357.html

The euro crisis may have eased recently, but companies and countries in the common currency zone still aren't investing enough to fuel growth. The best solution, a Berlin economics institute argues, is to establish an EU-wide investment fund.

I started reading this article before looking at the graph properly and thought - yes Ireland is probably underinvesting by a lot - it is easier to cut/delay capital spending by government and business than to cut payroll or welfare spending.

Given the general trend for relatively good economic news over the past few months could the minister for finance use the extra wiggle room to get capital spending back on track?

I'm sure there are plenty of worthy projects waiting to start - Dart Underground being a big obvious one.

Is an EU wide investment fund something that could feasibily be created?

comongethappy

9.4% shortfall is around €15 billion.

Was annual capital expenditure ever that high?

I should say that the chart measures both public and private investment.

andrew

Given that data, and the fact that borrowing costs are at an all time low, it seems a bit insane that there isn't some sort of massive EU wide fiscal stimulus in the works, or even being considered. Sure individual countries such as Ireland can't really borrow because we're very in debt, but the EU isn't - EU-28 debt/GDP ratio is only ('only?') 86% of GDP. The sooner the EU can issue debt the better.

comongethappy

andrew wrote: »

The sooner the EU can issue debt the better.

Maybe that's a Rubicon moment for some of the members?

Ireland could borrow for this, but the NTMA are more focused on clearing the high interest bailout loans due in the next few years.

Its a shame capital expenditure isn't politically popular.

realitykeeper

Deleted User wrote: »

I started reading this article before looking at the graph properly and thought - yes Ireland is probably underinvesting by a lot - it is easier to cut/delay capital spending by government and business than to cut payroll or welfare spending.

Given the general trend for relatively good economic news over the past few months could the minister for finance use the extra wiggle room to get capital spending back on track?

I'm sure there are plenty of worthy projects waiting to start - Dart Underground being a big obvious one.

Is an EU wide investment fund something that could feasibily be created?

There is an alternative to focusing on growth in economies that are already developed. In Africa, there is another New World just waiting to be developed. Hundreds of years ago, Europeans had the wherewithal to go to the Americas and develop them. Granted they were brutal to the natives and all that but the point I am making is that nowadays the Europeans and other first worlders are to soft and pampered to go anywhere without a shopping mall.

It does not make a lot of sense to try to super develop Europe when Africa is ripe for investment and development. There is so much scope for growth in Africa that Europeans could invest there for the mutual development of both continents. Trying to develop Europe more with its aging population, depleted resources and limited scope for growth defies logic.

By investing in Africa, Europeans would create employment opportunities for other skilled Europeans in Africa where there are skills shortages. They could establish companies there and repatriate some of the profits while providing jobs and opportunities to the Africans.

Freddie Dodge

realitykeeper wrote: »

There is an alternative to focusing on growth in economies that are already developed. In Africa, there is another New World just waiting to be developed. Hundreds of years ago, Europeans had the wherewithal to go to the Americas and develop them. Granted they were brutal to the natives and all that but the point I am making is that nowadays the Europeans and other first worlders are to soft and pampered to go anywhere without a shopping mall.

It does not make a lot of sense to try to super develop Europe when Africa is ripe for investment and development. There is so much scope for growth in Africa that Europeans could invest there for the mutual development of both continents. Trying to develop Europe more with its aging population, depleted resources and limited scope for growth defies logic.

By investing in Africa, Europeans would create employment opportunities for other skilled Europeans in Africa where there are skills shortages. They could establish companies there and repatriate some of the profits while providing jobs and opportunities to the Africans.

If you had money to invest, - would you invest in Africa? In a continent which has (apart from one or two countries) extractive political systems? Where some strongman "democratically elected" dictator can appropriate your assets for himself overnight? Where he can change laws at will to take over whatever sector you invest in....

You wouldn't have money to invest for long if you think Africa is a safe investment location.

Massive corporations have had their wings clipped properly in third world countries.

realitykeeper

Freddie Dodge wrote: »

If you had money to invest, - would you invest in Africa? In a continent which has (apart from one or two countries) extractive political systems? Where some strongman "democratically elected" dictator can appropriate your assets for himself overnight? Where he can change laws at will to take over whatever sector you invest in....

You wouldn't have money to invest for long if you think Africa is a safe investment location.

Massive corporations have had their wings clipped properly in third world countries.

The past decade has shown that Africa has learned from its mistakes while Europe, America and Japan have started to adopt policies that are alien to their past successes and will ultimately lead to their downfall. Yes I would invest in Africa. The countries to be avoided are now a small minority. South Sudan is one example but its troubles stem from its newness.

Most other African countries have fifty years of experience behind them. They know what doesn`t work and they see the potential and opportunities in the old fashioned conservative capitalism that creates dynamic economies.

country_mouse

Freddie Dodge wrote: »

If you had money to invest, - would you invest in Africa? In a continent which has (apart from one or two countries) extractive political systems? Where some strongman "democratically elected" dictator can appropriate your assets for himself overnight? Where he can change laws at will to take over whatever sector you invest in....

You wouldn't have money to invest for long if you think Africa is a safe investment location.

Massive corporations have had their wings clipped properly in third world countries.

i got burned investing in dubai , the ruling shiek decided that contracts when it comes to buying property could be ignored

africa makes dubai look like germany when it comes to transparency

Freddie Dodge

QUOTE=realitykeeper;91225031]The past decade has shown that Africa has learned from its mistakes while Europe, America and Japan have started to adopt policies that are alien to their past successes and will ultimately lead to their downfall. Yes I would invest in Africa. The countries to be avoided are now a small minority. South Sudan is one example but its troubles stem from its newness.

Most other African countries have fifty years of experience behind them. They know what doesn`t work and they see the potential and opportunities in the old fashioned conservative capitalism that creates dynamic economies.[/QUOTE]

The past decade has shown just about the exact opposite.

Try reading this (its a book, not an article) and then get back to me.

http://en.m.wikipedia.org/wiki/Why_Nations_Fail