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Formulating an investment plan requires choosing among alternative projects with different time-streams of costs and benefits. Planners have to define a decision criterion that reduces the stream of cost and benefit flows at different points in time to an index. This index can then be used to determine a project's admissibility and to select among admissible projects. Net present value, or cost-benefit analysis, is regarded as the most rational one for that purpose. However, application of cost-benefit analysis in a developing country involves many difficulties. A major one is estimation of the social rate of discount. This study is intended to develop a practical approach for measuring the social rate of discount under conditions in Iraq in order to improve the selection process for development projects. The study holds that any applicable methodology to determine this variable should be sensitive to the principal characteristics of the particular economy and to the underlying meanings of available data. Accordingly, it was shown that the supply of savings is not appropriate for that purpose, since neither the individual nor the social time preferences are adequately reflected in its information. Likewise, the alternative of calculating the social rate of discount by observing the pre-tax rates of return on investment will yield misleading results due to serious distortions in different markets. Based on the fact that more than 98 percent of investment funding is provided by revenues from crude oil exports, the study recommends the need for solvable models of optimal path with exhaustible resources. These models should maximize the social welfare of both current and future generations. Meanwhile, optimal growth calculations would yield the required rate of discount as a by-product of the maximization process. In the absence of such calculations, two methods were recommended to estimate the discount rate within the second best context. The first is to derive it from consumption information. The other way is to estimate the opportunity cost of investable funds by observing the long-term rate of interest prevailing in international capital markets.

This dissertation presents an integrated-empirical analysis of the relationship between Foreign Direct Investment (FDI) and the entrepreneurial activity in Mexico. The bulk of the literature has focused its attention on measuring FDI's effects on economic growth across countries using secondary data at the macro level, but it has neglected the analysis for Latin American countries, particularly; it has neglected the analysis of FDI's effects on the entrepreneurial activity; and the factors that foster or hinder the entrepreneurial activity in an open-market system, at the institutional level.In this work I present evidence that supports the hypothesis that FDI is positive and significant correlated with economic growth but only when economic growth is presented as a linear function of FDI. I also present evidence that contest the hypothesis that FDI is positive correlated with the creation of new firms, particularly for a setting in which the host country's economic structure is heavily characterized by micro and small low-tech-firms, as it is the case in Mexico. However, I also present evidence that supports the findings of previous studies regarding external and internal factors affecting individuals who are willing to take risks and to become entrepreneurs across regions. This integrated approach is based on the use of different methodological tools that helped me to explore the factors affecting the entrepreneurial activity in Mexico, both at different economic sectors, and at different regional levels.I argue that each potential entrepreneur faces different environmental constraints and personal limitations (external and internal factors) when is about to start a new venture, such differences are subject to personal traits, and to the institutional context in which the future entrepreneur interacts. I found that there are similar institutional constraints across Mexican states affecting the rate of new firms' creation; I also found that individuals - entrepreneurs - across Mexican States differ in their willingness to take risks depending upon their geographic location. I will also discuss how these differences and similarities across Mexican States raise important implications for public policy toward the development of a new entrepreneurial class in the country.

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This thesis explores institutions under which venture capital investment operates in China and whether and how these institutions affect venture capitalists’ (VCs) investment preferences, ex-ante project screening strategies, and ex-post monitoring activities in China. Based on an analysis of about 50 unstructured and semi-structured interviews and an examination of more than 800 venture capital backed deals, this study finds that regulations on corporate governance impact VCs’ investment activities in China. Due to regulatory restrictions, most foreign venture capital firms are structured under limited partnerships, whereas all domestic venture capital firms (VCFs) are structured as limited companies in China. The difference in corporate governance of VCFs heavily affects VCs’ investment strategies in China. VCFs under limited partnerships show more risktaking capability than those structured as limited companies by investing more in younger projects with higher R&D intensity. Associated with the difference in investment preferences, VCFs under limited partnerships employ stage financing more frequently than those structured as limited companies do. At the same time, the stage financing strategies deployed by VCFs under limited partnerships are closely related to agency problems and transaction uncertainties. The more serious agency problems are the more intensive stage financing will be. However, VCFs structured as limited companies rarely employ stage financing and there is no visible pattern shown in their stage financing arrangements. Finally, similar to the practices in developed countries, VCs in China also take human capital factors as the utmost important criteria. However, they are more demanding in project screening by imposing additional criteria. Further, VCFs under limited partnerships are more demanding and more sensitive to market growth rate and financial returns, and more concerned about public policies. These results may be explained by the weak regulatory institutions in China and the incentives provided by different governance structures. VCFs structured as limited companies are organized hierarchically. Their incentive structure is designed to discourage risk taking and responsibilities. VCFs under limited partnership are more independent in governance that their incentive structures are designed to encourage risk taking and responsibilities.