5.1 Credit, investment, and
expenditure About the data
Definitions
Data sources
About the data
The indicators in the table measure the relative size of states and markets in national
economies. There is no ideal size for states, and size alone does not capture their full
effect on markets. Large states may support prosperous and effective markets; small states
may be predatory toward markets. The resources of a large state may be used to correct
genuine market failuresor merely to subsidize state enterprises making goods or
providing services that the private sector might have produced more efficiently. A large
share of private domestic investment in total investment may reflect a highly competitive
and efficient private sectoror one that is subsidized and protected. Thus, like
other indicators in this book, the indicators here provide an important but incomplete
picture of what they measurein this case the roles of states and markets.
Because data on subnational units of governmentstate, provincial, and
municipalare not readily available, the size of the public sector is measured here
by the size of the central government. While the central government is usually the largest
economic agent in a country and typically accounts for most public sector revenues,
expenditures, and deficits, in some countriesespecially large ones state,
provincial, and local governments are important participants in the economy. In addition,
"central government" activities can vary depending on the accounting practice
followed. In most countries central government finance data are consolidated into one
overall account, but in others only budgetary central government accounts are available,
which often omit the operations of state-owned enterprises (see Primary data
documentation).
When direct estimates of private gross domestic fixed investment are not available,
such investment is estimated as the difference between total gross domestic investment and
consolidated public investment. Total investment may be estimated directly from surveys of
enterprises and administrative records or indirectly using the commodity flow method.
Consolidated measures of public investment may omit important subnational units of
government. In addition, public investment data may include financial as well as physical
capital investment. As the difference between two estimated quantities, private investment
may be undervalued or overvalued and subject to large errors over time. (See the notes to
table 4.9 for further discussion on measuring domestic investment.)
Statistics on foreign direct investment are based on balance of payments data reported
by the International Monetary Fund (IMF), supplemented by data on net foreign direct
investment reported by the Organisation for Economic Co-operation and Development and
official national sources. The data suffer from deficiencies relating to definitions,
coverage, and cross-country comparability. (See the notes to table 6.8 for a detailed
discussion of data on foreign direct investment.)
Data on domestic credit to the private sector are taken from the banking survey of the
IMFs International Financial Statistics or, when the broader aggregate is not
available, from its monetary survey. The monetary survey includes monetary authorities
(the central bank) and deposit money banks. In addition to these, the banking survey
includes other banking institutions such as savings and loan institutions, finance
companies, and development banks. In some cases credit to the private sector may include
credit to state-owned or partially state-owned enterprises.
Definitions
Private investment covers gross outlays by the private sector
(including private nonprofit agencies) on additions to its fixed domestic assets. Gross
domestic fixed investment includes similar outlays by the public sector. No allowance is
made for the depreciation of assets. Foreign direct investment is net
inflows of investment to acquire a lasting management interest (10 percent or more of
voting stock) in an enterprise operating in an economy other than that of the investor. It
is the sum of equity capital, reinvestment of earnings, other long-term capital, and
short-term capital as shown in the balance of payments. Gross domestic investment (used in
the denominator) is gross domestic fixed investment plus net changes in stocks
inventories. Credit to private sector refers to financial resources
provided to the private sectorsuch as through loans, purchases of nonequity
securities, and trade credits and other accounts receivablethat establish a claim
for repayment. For some countries these claims include credit to public enterprises.
Private nonguaranteed debt consists of external obligations of private
debtors that are not guaranteed for repayment by a public entity. Total external debt is
the sum of public and publicly guaranteed long-term debt, private nonguaranteed long-term
debt, IMF credit, and short-term debt. Central government expenditure comprises
the expenditures of all government offices, departments, establishments, and other bodies
that are agencies or instruments of the central authority of a country. It includes both
current and capital (development) expenditures.
Data sources
Private investment data are from the International Finance Corporations Trends
in Private Investment in Developing Countries 1997 and World Bank estimates. Data on
foreign direct investment are based on estimates compiled by the IMF in the Balance of Payments Statistics Yearbook,
supplemented by World Bank staff estimates. Data on domestic credit are from the IMFs
International Financial Statistics, and data on government expenditure are from the
IMFs Government Finance Statistics Yearbook. External debt figures are from
the World Banks Debtor Reporting System as reported in Global Development Finance
1998.
THE WORLD BANK METHODOLOGY:
----- On External Debt
Definitions
Debt
indicators
----- On WORLD DEVELOPMENT INDICATORS
Size of the economy
Quality of life
Development progress
Trends in long-term development
Long-term structural change
Key indicators for other economies
Population
Land use and deforestation
Growth of output
Credit, investment and expenditures
Integration with the global economy
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