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Investment under Risks and Uncertainty in Afghanistan / Farazi, Subika.
World Bank Open Knowledge Repository (formerly "World Bank E-Library Publications") Available online
View online- Format:
- Book
- Government document
- Author/Creator:
- Farazi, Subika.
- Series:
- Policy research working papers.
- World Bank e-Library.
- Language:
- English
- Subjects (All):
- Access to Finance.
- Business Cycles and Stabilization Policies.
- Common Carriers Industry.
- Construction Industry.
- Crime and Society.
- Education.
- Educational Sciences.
- Finance and Financial Sector Development.
- Financial Frictions.
- Food and Beverage Industry.
- General Manufacturing.
- Industry.
- Investment Decisions.
- Macroeconomics and Economic Growth.
- Plastics and Rubber Industry.
- Pulp and Paper Industry.
- Risks.
- Social Development.
- Textiles Apparel and Leather Industry.
- Uncertainty.
- Local Subjects:
- Access to Finance.
- Business Cycles and Stabilization Policies.
- Common Carriers Industry.
- Construction Industry.
- Crime and Society.
- Education.
- Educational Sciences.
- Finance and Financial Sector Development.
- Financial Frictions.
- Food and Beverage Industry.
- General Manufacturing.
- Industry.
- Investment Decisions.
- Macroeconomics and Economic Growth.
- Plastics and Rubber Industry.
- Pulp and Paper Industry.
- Risks.
- Social Development.
- Textiles Apparel and Leather Industry.
- Uncertainty.
- Physical Description:
- 1 online resource (38 pages)
- Place of Publication:
- Washington, D.C. : The World Bank, 2018.
- System Details:
- data file
- Summary:
- This paper investigates the state of low investment in Afghanistan by studying how investment decisions interact with risks and uncertainty in the presence of underdeveloped financial markets. The analysis shows that investing firms experience a higher probability of being affected by events related to crime and corruption and spend more on security arrangements. Firms that participate in the formal financial sector are also subject to higher levels of risk and uncertainty. As more productive firms face higher risks and uncertainty, a model of resource allocation with heterogeneous firms is used to quantify the economic loss from crime and corruption. The estimated aggregate output loss of 12 percent is significantly higher than the 7 percent loss observed in the absence of the resource allocation channel.
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