Investment theories and concepts

But after that, for the time path of P 1 price, the optimal capital stock K 1 moves at a constant rate, while for P 2 time path of output price, the optimal capital stock K 2 increases as the former rises. Actually, there are three sources of funds available to the firm for investment which are grouped under internal funds and external funds. The firm can buy more capital and issue additional shares in the stock market. This is illustrated in Figure 2 where Y and Y 1 are the two isoquants. For any particular level of profits, the higher the interest rate, the smaller will be the optimal capital stock, and vice versa. For many purposes, including the determination of the level of aggregate demand, gross investment is the relevant concept.

The theory focuses on how business elites, not voters, play the leading part in political systems. The theory offers an alternative to the conventional, voter-focused, Voter Realignment theory and Median investment theories and concepts theoremwhich has been criticized by Ferguson and. Ferguson frames his theory as being both inspired by and an alternative conceots the traditional median voter theories of democracy such as that posited by Anthony Downs in his work An Economic Theory of Democracy. While Downs largely overlooked the implications of this insight, Ferguson makes it theoires foundation of the Investment Theory of Party Competitionrecognizing that if voters cannot bear the cost of becoming informed about public affairs they have little hope of successfully supervising government. Investment theories and concepts central claim of concetps Investment Theory is that since ordinary citizens cannot afford to acquire the information required to invest in political parties, the political system will be dominated by those who .

This article deals with the evolution of the concept of investment and the approaches of investment management: the origin of the concept of investments, which is reflected in the works by classics of political economy, and the modern interpretation of the concept, represented in the papers by foreign and local economists. The article analyzes the content of the investment concept, formulated by various scientists. Models of fundamental economic growth based on their investments and efficiency are presented. Structural changes in the direction of investments at enterprises have been noted. Abstract: This article deals with the evolution of the concept of investment and the approaches of investment management: the origin of the concept of investments, which is reflected in the works by classics of political economy, and the modern interpretation of the concept, represented in the papers by foreign and local economists. Keywords: the concept of investment, investment theories, models of economic growth, foreign direct investment, types of investments. In the conditions of European integration and internationalization of economic relations, investment and investment activity is becoming one of the important factors for achieving prosperity and competitiveness of business.

This article deals with the evolution of the concept of investment and the approaches of investment management: the origin of the concept of investments, which is reflected in the works by classics of political economy, and the modern interpretation of the concept, represented in the papers by foreign and local economists. The article analyzes the content of the investment concept, formulated by various scientists. Models of fundamental economic growth based on their investments and efficiency are presented.

Structural changes in the direction of investments at enterprises have been noted. Abstract: This article deals with the evolution of the concept of investment and the approaches of investment management: the origin of the concept of investments, which is reflected in the works by classics of political economy, and the modern interpretation of the concept, represented in the papers by foreign and local economists.

Keywords: the concept of investment, investment theories, models of economic growth, foreign direct investment, types of investments. In the conditions of European integration and internationalization of economic relations, investment investmebt investment activity is becoming one of the important factors for achieving prosperity and competitiveness of business.

Despite the fact that various scientists made reference to investments and their role in thfories the development of countries as early as at the beginning of the 18th century, the relevance of the investment activity of enterprises is increasingly pointed to nowadays, in connection with the transition to market conditions of management and the struggle for limited resources.

Based on this fact, the importance of the investment management and a deeper understanding of the management mechanisms of company’s investment activities is growing. In the economic literature, investments are defined as investing capital for the purpose of its further increase.

At the same time, the capital gain should cnocepts sufficient. The concept of investment, with its broader meaning is addressed frequently in the economic theory and practice outline. The origin of the concept of investments is reflected in the papers by classics of political economy, such as: A. Smith, D. Ricardo, J. Mill classical theoryE. Hecksher, B. Ohlin, R. Nurkse, I. Fisher neoclassical theoryJ.

Keynes Keynesian theoryF. Machlup, R. Har-rod, E. Domar neo-Keysian theoryK. Marx Marxist theoryJ. Galbraith theory of TNCs and monopolistic advantagesH. Minsky, C. Kindleberger theory of monopolistic advantagesM. Porter competitive advantage of nationsJ. Dunning theory of the country’s investment investmeent. Originally investments, namely direct foreign investments were analyzed by scientists-economists at the country and branch level.

Smith, a classical scholar in economic theory argued in his work » An Inquiry into the Nature and Causes of the Wealth of Nations» that, in the face of restrictions on the export of money capital, the exchange rate of the national concepgs is declining, prices are rising, because the amount of money gold and silver exceeds the actual demand in the country [8, P.

His follower, D. Ricardo, considered the possibility anv moving entrepreneurial capital and labor to countries with absolute advantages, respectively, with low production costs and high profit rate. The importance of investments and their decisive role in the overall employment system was noted by the English economist J. In his work, «The General Theory of Employment, Interest and Money» the scientist pointed out that a country can turn into a real exporter of capital only when its exports of goods exceed imports, and the growth of foreign investment should be supported by the trade surplus of the exporting country [4, P.

In turn, Austrian economist F. Machlup believed that export of capital, influencing domestic investments, could limit. In capital importing countries investment growth is stimulated, which increases consumption and the growth of national income. And R. Harrod argued that if savings in a country exceed the investments, then the pace of economic growth slows down, and the tendency thheories export capital increases.

American economist H. Minsky, considers foreign direct investment at the level of multinational companies. The scientist argues that direct investment flows of TNCs are directed to other countries, when direct investors have a monopoly advantage over similar local companies of foreign countries. American scientist I. Fisher made a significant contribution to the development of the theory of investments. According to the scientist, all participants of the investment process, whether they are managers.

The peculiarity of this approach was putting forward a hypothesis about certainty of conditions under which the investment decision is being. Thus, traditional approaches to the concept of investment can be divided into two groups: l mac-roeconomic approach that explains the international movement of capital based on differences in the structure of national economies, and 2 invwstment based on the theory of firm that considers the activities of a transnational corporation TNCas a natural consequence of the growth of firm.

It should be noted that, when examining the activities of TNC, the authors approached the evaluation of efficiency from the point of view of the company directly investing in this or that country. There is a limited nature of traditional approaches, which manifests itself in the absence of an analysis of the ahd assets that have different levels of income and risk.

There is only one factor that influences the investment decision, namely, inevstment. At the same time, the risk assessment was not given much importance, which was not linked to the level of income. The macroeconomic approach is characterized by two directions: investing in other countries and attracting foreign investment into the country. In his work «the Economy in seven lessons. Thoughts for those of today and those of tomorrow» L. Mises draws attention upon the development of foreign investment, which was the most important event in the course of the nineteenth century [5, P.

He believes that the investment of capital across the border have begun to play an important role in bussinesses around the world. It should be noted, that in the specialty literature, the concept of investment has been variously interpreted and used with several meanings. This con. Moreover, there is no common scientists’ opinion regarding the concept of «investing». Some theorists have attempted to highlight the most important characteristics of the investments made at the micro- or macroeconomic level, insisting, more or less on certain features, that are detrimental to.

Thus, foreign scholars consider that: the onvestment entails sacrificing curent resources in order to obtain future income, changing a certainty with a future hope H. Peumanssacrificing a capital for future achievements P. Masse or giving up liquid funds in the hope of higher future revenues, distributed over time F.

The development of the modern concept of investments is associated with the «portfolio theory of investment» developed by the American economist H. In his «The choice of portfolio» paperthe scientist links profitability and risk and investment theories and concepts out that the development of an investment solution involves the achievement of two conflicting objectives of investment: 1 maximizing income, i. There is a significant contribution to the development of modern concept of investments from Romanian and Moldovan scientists as well, such as: M.

Bilaus, F. Buhociu, C. Cicea, L. Cobzari, A. Calin, V. Dumitrascu, M. Lupan, D. Slonovschi, M. Stoian, Fl. Staicu, R. Tasca, G. Prelipcian, O. Popovici, A. Paul, A. Popa, Gh. Investjent, S. Matei, L. Hincu, A. Horobet, A. Mazilu, C. Munteanu, Gh. Negoescu, I. Vasilescu, Theoties. Romanu, D. Romanian scholar D.

Zait, in his paper «Economic Efficiency of Investments»concdpts that investments have to be approached in close connection to the process of economic development and growth. According to the scientist, development depends on the decision-makers capacity:. The importance of investments and their role in economic growth have been approached by the well-known scholars and presented in the examples developed by them table 1.

If in the early ies of the 20th century, investment was viewed as capital investments in the formation of the production base of enterprises, the purchase of equipment, technological lines and the construction of basic production assets, then in the 21st century, investment takes on a dual meaning.

In his work «Investment Strategies in Business»the romanian scholar G. Prelipcian mentioned that the notion of investment has two meanings:.

The Fundamentals — Why is Investing Important?

But the sharp rise in the cost of borrowing is not only due to a rise in the market rate of interest but also due to the imputed risk of increased debt servicing by the firm. The theory of flexible accelerator has been developed in various forms by Chenery, Goodwin, Koyck and Junankar. In reality, an unlimited supply of funds is not available to the firm in any time period at the market rate of. The flexible accelerator theory removes one of the major weaknesses of the simple acceleration principle that the capital stock is optimally adjusted without any time lag. Retained earnings and depreciation expense are sources of funds internal to the firm; the other sources are external to the firm. Since x is assumed constant, investment is a function of changes in output. On the other hand, in the case of the naive accelerator, net investment will be decreasing continuously and will also become zero, as shown in Figure 6. So the elastic portion of the MCF curve becomes shorter. The flow of net receipts R at time t is given by. The condition of equation 9 implies that with w and p fixed, c must remain unchanged. Assuming other price p and w as given, K 1 is the path of optimal capital when the interest rate is unchanged, and K 2 is the path after the rise in interest rate. By doing that, you would enjoy Gordon Pape’s lowest level on the risk scale, and enhance your investment return in the process. This implies a fixed relationship between the capital stock and output. It investment theories and concepts that unlimited funds are available to the firm at the market rate of .