Economic growth is essential to achieving the Millennium Development Goals (MDGs), and central to the growth agenda is the investment climate, because it addresses the main sources of growth: increasing investment (local and foreign), improving efficiency, and enhancing productivity. Improving the investment climate is one of the two pillars of the World Bank’s development strategy and was the subject of the World Development Report 2005: A Better Investment Climate for Everyone
Finding from investment climate surveys
Current and future research directions
Consensus is growing that the investment climate is critical to economic growth, but there is less understanding of how the different elements of the investment climate interact with one another and affect the behavior of firms. How do investment climate reforms interact with other key conditions such as infrastructure, the proximity of other firms, or the size of the market? How do investment climate dimensions, such as labor and financial sector regulation, interact with others, such as corruption and the rule of law? Lack of answers to these questions has hindered the formulation of reform priorities and weakened the case for reform in slow-growing countries.