Title: Investment Preferences of Cities and Regions by the General Population
Abstract: 1. MAKING INVESTMENT DECISIONS IN CITIES AND REGIONS The article analyses the efficiency of investment activities in cities and regions according to various budget sections where long-term investments are directed and according to their perception by the population. The subject of investment explores the relationship between the current and future consumption of economic goods. Irwing Fisher defined (Fisher, 1930) an interest as the result of interaction between willingness and opportunity. This willingness plays a role in the interest determination and it means the surrendering of the current consumption for the benefit of future generations, while making investment decisions happens in very uncertain conditions. If an economy reduces the production of consumer goods for the sake of capital goods, it can grow faster and acquire a greater amount of both consumer and capital goods in the future. Both the general neoclassical growth model and the theory of endogenous growth place an emphasis on the role of public investments in the economic growth (Romer, 1986; Lucas, 1988; Rebelo, 991; Barro and Sala-i-Martin, 1999). Besides creating economic stimuli through the development of infrastructure, support to education, healthcare, research and development, they also have a positive side effect on private investments. However, the relationship of public investments to private investments and economic growth brings some doubtful empirical results (Devarajan et al., 1996). The volume and effectiveness of investment utilisation affects the dynamics of economic development, economic growth and overall economic performance. In making investment decisions in public administration several investment variants are considered based on their ex-ante evaluation with respect to future effects. In positive cases, their relationship to strategic plans is additionally taken into consideration based on participation of the public, i.e. public interests are considered as well. Moreover, the effectiveness of investment may be analysed by means of so-called Data Envelopment Analysis (Dobrea, Ciocoiu, Dinu, 2013). The structural changes of the economic systems in Central and Eastern Europe (CEE) since the early 90s have resulted in large investment requirements for the reconstruction of the infrastructures such as telecommunications, roads, railways, airports, and water management facilities. A decision to use public-private partnership financing was made in all the CEE countries (Suhanyi, 2009). Generally accepted economic rules may also be applied to territorial units such as cities and regions. In Slovakia, as in other CEE countries, a process of fiscal decentralization took place, thereby giving regional governments the right of investment decision-making to improve the quality of life in, and infrastructure, environment and increase the competitiveness and development of, their regions. On the other hand, this decentralisation led to greater regional disparities in the CEE countries (Tvrdon, Skokan, 2011). It is an individual decision of each self-governing unit how to divide expenditure to current and capital ones. If one decides to increase its capital expenditure, the intention is to boost its regional economy. In the public sector, investments as an accounting and financial category present larger monetary expenses which are to bring economic benefits in the long run (Suhanyiova, Horvathova, 2013). A range of specific priorities is relatively wide, and national or regional authorities have to select an appropriate portfolio of priorities, and the extent to which they allocate funds for them is based on an ex-ante evaluation and public priorities (Hudec, 2008). The private sector measures the efficiency of the realized investments by comparing the business profit to the costs incurred. In order to measure public benefit the public sector employs certain intermediary indicators (e.g. the number of rendered decisions, length of maintained roads etc. …
Publication Year: 2015
Publication Date: 2015-05-01
Language: en
Type: article
Access and Citation
AI Researcher Chatbot
Get quick answers to your questions about the article from our AI researcher chatbot