INVESTMENT AND FACTORS Investment has different meanings in finance and economics.

In finance, investment is putting money into an asset with the expectation of capital appreciation, dividends, and/or interest earnings. This may or may not be backed by research and analysis. Most or all forms of investment involve some form of risk, such as investment in equities, property, and even fixed interest securities which are subject, among other things, to inflation risk. It is indispensable for project investors to identify and manage the risks related to the investment. In economics, investment is the accumulation of newly produced physical entities, such as factories, machinery, houses, and goods inventories. Also, investment is spending for goods used for future rather than current consumption. Investment in economics refers to spending on machinery and equipment, construction of permanent structures or highways, building business goods inventory. FACTORS AFFECTING INVESTMENT 1. Technological Advance and Innovation 2. Discovery of Natural Resources 3. Government Policies 4. Foreign Trade 5. Political Environment 6. Expectations 7. Rate of Population Growth 8. Territorial Expansion

9. Price Level 10. Market Structure 11. Availability of Finance 12. Conditions in the Labor Market 13. Present Stock of Capital Goods 14. Aggregate Demand

CLASSIFICATION OF INVESTMENT 1. Induced and Autonomous Investment a. Induced Investment investment which is governed by income and amount of profit. b. Autonomous Investment investment which is independent of the level of income or output. 2. Private and Public Investment a. Private Investment investment which is made by private individuals with the sole objective of obtaining profits. b. Public Investment investment which is made by central, provincial or local-self government of a country. 3. Gross and Net Investment a. Gross Investment the total expenditure incurred on capital goods at any given time in an economy. b. Net Investment investment that enlarges economys stock of real capital assets. 4. Intended and Unintended Investment a. Intended Investment investment that is made according to a definite plan in order to achieve a given objective.

b. Unintended Investment investment that is involuntary incurred by an investor. TYPES/KINDS/COMPONENTS OF INVESTMENT 1. Plant and Equipment Expenditure 2. Construction Spending 3. Breeding Stocks and Orchards 4. Changes in Inventories IMPORTANCE OF INVESTMENT 1. Determination of Income and Employment 2. Volatile Factor o Reasons for Volatility a. Capital Durability b. State of Technology c. Expectations d. The variability of profits results not only in variability of incentive to invest but also in variability of the means of investment. 3. Economic Development FORMULA: I = Yd C

PROPENSITY TO INVEST 1. Average Propensity to Invest the ratio of total income and total investment.

2. Marginal Propensity to Invest the ratio of change in investment and change in income.

INVESTMENT MULTIPLIER In economics, the multiplier effect refers to the idea that an initial spending rise can lead to even greater increase in national income. In other words, an initial change in aggregate demand can cause a further change in aggregate output for the economy. Where: K = Multiplier Y = Change in Income I = Change in Investment

Deriving the Formula:

CURRENT EVENTS

Motorists advised on 13 road projects till 2016

By Jaymee T. Gamil, Miguel R. Camus Philippine Daily Inquirer 2:28 am | Thursday, January 23rd, 2014 Up to 13 road and mass transport projects in the capital are in the pipeline in the next two years, the Metropolitan Manila Development Authority (MMDA) said Wednesday as it advised motorists and commuters to brace themselves for continued heavy traffic on major routes till 2016. In a meeting, the Metro Manila Regional Development Council (RDC)a body composed of the MMDA and the 17 mayors of Metro Manilaapproved the various projects proposed by the Department of Transportation and Communications (DoTC) and the Department of Public Works and Highways (DPWH). Speaking to reporters, MMDA Chair Francis Tolentino said the construction schedules of these projects might overlap and there will be a point when they will happen simultaneously. To prepare for this, the project proponents will meet again on the first week of February to draft a traffic management plan for the whole metro. Alternative routes and rerouting schemes will be discussed not just per project but based on their being interconnected, Tolentino added. In the morning session, DoTC representatives presented a plan to start constructing two transport stations in Taguig and Paraaque cities under the Integrated Terminal System starting in the fourth quarter of the year. LRT-MRT link Transportation officials also advised the body about the Light Rail Transit 1 North Extension Common Station that would connect the LRT 1 line and the Metro Rail Transit (MRT) in Quezon City. Work starts in July this year and is expected to be finished in September 2015. The DOTCs LRT 2 East Extension Project, which will extend the rail line along Marcos Highway from Santolan station to Sumulong Highway, is also expected to be constructed from November this year to June 2016. DPWH representatives, meanwhile, presented the center link project connecting Bonifacio Global City to Ortigas Center. Construction is expected to start in July this year. Phase I of the project will put a bridge over Pasig River between Sta. Monica Street in Pasig City to Lawton Avenue in Makati City. Phase II will run from Lawton to the BGC Viaduct, then from Shaw Boulevard to the Sta. Monica viaduct. The DPWH also presented for RDCs approval a four-lane underpass project on Gil Puyat Avenue (Buendia), which will pass through the intersections of Makati Avenue and Paseo de Roxas. The agency intends to start it this April. The public works department also discussed the proposed Edsa North-North Mindanao interchange and the Circumferential Road 3 (C3) project. Earlier Christmas lanes Aside from these projects, Tolentino cited other roadworks ahead: -Repairs on Pasay Road and Magallanes interchange; -Construction of the Naia elevated expressway starting this quarter; -Construction of the Edsa-Taft flyover in the last quarter -Construction of the Skyway 3 from Makati to Quezon City, which was launched on Wednesday. Tolentino said the MMDA would most likely revive its so-called Christmas lanes much earlier than the holidays and require the project proponents to deploy their own traffic marshals to assist motorists. After these projects, expect traffic to ease up. No pain, no gain, he said. By the first quarter of 2016, we will see all these projects in action. Completion is expected in April 2017, though SMC president Ramon Ang as well as Transportation Secretary Joseph Abaya said it could be finished a year ahead of schedule if right of way issues are immediately addressed.

Skyway Stage 3 to cut Buendia - Balintawak travel to 15 minutes

By Miguel R. Camus Philippine Daily Inquirer 8:49 pm | Wednesday, January 22nd, 2014 MANILA, PhilippinesThe launch of the first of two private sector-led elevated expressways linking northern and southern Metro Manila was held on Wednesday, marking the formal start of a major infrastructure project aimed at easing traffic jams in the metropolis. The project, dubbed the Metro Manila Skyway Stage 3, is led by conglomerate San Miguel Corp. and Indonesias Citra Group, which was also behind the original Skyway project in the Southern part of the capital district. The 14.8-kilometer, six-lane elevated expressway, will run from Buendia, Makati City, to Balintawak, Quezon City, and will cut travel time from more than an hour-and-a-half to about 15 minutes. The toll-road is expected to be fully completed in April 2017, but government officials and San Miguel president Ramon Ang hinted that it could be finished a year ahead of schedule. There is a proposed accelerated plan. Highly critical here is right-of-way, Transportation and Communication Secretary Joseph Abaya said after the launch ceremonies, where President Aquino was also present. If things fall into place and right-of-way is acquired without problems, then we can get it done by June 2016. Abaya was referring to the time when President Aquino steps down. Another connector toll road linking North Luzon Expressway and South Luzon Expressway that is being pursued by Manuel V. Pangilinan-led Metro Pacific Investments also expects to complete its project by June 2016 after construction begins in July this year. President Aquino, in his speech to guests comprised of officials from the Department of Transportation and Communications and the Department of Public Works and Highways as well as businessmen involved with the project, noted that the Skyway Stage 3 would create 6,000 direct jobs as well as 10,000 to 12,000 indirect jobs during its construction period. Once completed, the [Skyway Stage 3] will reduce traffic at Edsa and other primary roads in Metro Manila because of the addition of an alternative highway linking southern and northern Luzon, Aquino said in Filipino. He noted that roads would be about less dense by an estimated 55,000 vehicles daily. Given the state of traffic in Metro Manila, both the public and private sector have been looking for ways to ease the gridlock and we believe that this project is a step in the right direction. The connector road will go a long way in helping solve our traffic problems, Ang said in a speech. We recognize the importance of good infrastructure in creating the conditions for a dynamic economy, Ang said. A job-creating economy needs good infrastructure and a good transport system. Apart from Edsa, reduced traffic would be felt in C-5 and Central Manila, Citra said. Nevertheless, the company noted that traffic during construction would worsen traffic for motorists. The group noted that necessary safety devices would be deployed together with an adequate number of traffic personnel. Moreover, traffic re-routing and counterflow systems would be implemented, when needed, it said. Skyway Stage 3 will start at the end of the existing Skyway Stage 1in Buendia, run through the length of Osmea Highway, Quirino Avenue, Paco, Sta. Mesa via the Nagtahan flyovers, traverse Aurora Blvd and Araneta Ave. up to Sgt Rivera Road and end at the bend of A Bonifacio Ave. towards NLEX.