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The Flexible Accelerator Model of Investment: An Application to Ugandan Tea- Processing Firms

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  • Twine, Edgar E.
  • Kiiza, Barnabas
  • Bashaasha, Bernard

Abstract

The study uses the flexible accelerator model to examine determinants of the level and growth of investment in machinery and equipment for a sample of tea-processing firms in Uganda. Using a dynamic panel data model, we find that, in the long run, the level of investment in machinery and equipment is positively influenced by the accelerator, firm-level liquidity, and a favourable investment climate in the country. Depreciation of the exchange rate negatively affects investment. We conclude that firm-level strategies that increase output and profitability, and a favourable investment policy climate, are imperative to the growth of the tea industry

Suggested Citation

  • Twine, Edgar E. & Kiiza, Barnabas & Bashaasha, Bernard, 2015. "The Flexible Accelerator Model of Investment: An Application to Ugandan Tea- Processing Firms," African Journal of Agricultural and Resource Economics, African Association of Agricultural Economists, vol. 10(1), pages 1-15, March.
    • Handle: RePEc:ags:afjare:200590
    DOI: 10.22004/ag.econ.200590
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    2. Yusuf Abdulkarim, 2023. "A systematic review of investment indicators and economic growth in Nigeria," Palgrave Communications, Palgrave Macmillan, vol. 10(1), pages 1-13, December.

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