Investment demand is determined by expectations on future demand, capital requirements, the relative cost of investments which includes the cost of investment goods and services, interest rates and returns to capital. Investments have two impacts in the economy: i) they increase the productive capacity allowing the economy to produce more without cost differentials in capital markets ii) they provide a boost based on multiplier effects of the investment bundle (i.e., the sectors that provide goods necessary for the realization of investments). Investments in coal fired plants are likely to have higher multiplier impact than investments in solar PV parks, as the production of PV panels is highly concentrated in few countries and are most likely imported.
