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Fixed capital stock depreciation in developing countries: Some evidence from firm level data

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  • Yisheng Bu
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    Abstract

    Previous growth accounting studies suggest severe capital underutilisation and mismeasurement of the stocks of capital in some developing countries. Using the firm level data sets from the World Bank surveys, this paper estimates the economic depreciation rates of fixed capital stocks in the manufacturing industries of seven developing countries. The findings indicate that the stocks of fixed capital may depreciate at higher rates in these countries, as compared with the normal rates usually assumed for advanced industrial countries. This study also discusses the economic and social forces that may influence the incentive to maintain capital appropriately and the implications of high depreciation for the total factor productivity (TFP) growth estimates and volatility of capital accumulation.

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    Bibliographic Info

    Article provided by Taylor & Francis Journals in its journal Journal of Development Studies.

    Volume (Year): 42 (2006)
    Issue (Month): 5 ()
    Pages: 881-901

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    Handle: RePEc:taf:jdevst:v:42:y:2006:i:5:p:881-901

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    1. Devarajan, Shantayanan & Easterly, William R & Pack, Howard, 2003. "Low Investment Is Not the Constraint on African Development," Economic Development and Cultural Change, University of Chicago Press, vol. 51(3), pages 547-71, April.
    2. Stephen D. Oliner, 1993. "New evidence on the retirement and depreciation of machine tools," Working Paper Series / Economic Activity Section 147, Board of Governors of the Federal Reserve System (U.S.).
    3. Easterly, William, 1999. "The ghost of financing gap: testing the growth model used in the international financial institutions," Journal of Development Economics, Elsevier, vol. 60(2), pages 423-438, December.
    4. Becker, Gary S & Mulligan, Casey B, 1997. "The Endogenous Determination of Time Preference," The Quarterly Journal of Economics, MIT Press, vol. 112(3), pages 729-58, August.
    5. Valerie A. Ramey & Matthew D. Shapiro, 2001. "Displaced Capital: A Study of Aerospace Plant Closings," Journal of Political Economy, University of Chicago Press, vol. 109(5), pages 958-992, October.
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    Cited by:
    1. Sarath Delpachitra & Pham Van Dai, 2012. "The Determinants of TFP Growth in Middle Income Economies in ASEAN: Implication of Financial Crises," International Journal of Business and Economics, College of Business, and College of Finance, Feng Chia University, Taichung, Taiwan, vol. 11(1), pages 63-88, June.
    2. Ilham Haouas & Raimundo Soto, 2012. "Has the UAE Escaped the Oil Curse?," Documentos de Trabajo 412, Instituto de Economia. Pontificia Universidad Católica de Chile..
    3. Arazmuradov, Annageldy & Martini, Gianmaria & Scotti, Davide, 2014. "Determinants of total factor productivity in former Soviet Union economies: A stochastic frontier approach," Economic Systems, Elsevier, vol. 38(1), pages 115-135.
    4. Ben-Gad, M., 2009. "The two sector endogenous growth model: an atlas," Working Papers 09/02, Department of Economics, City University London.
    5. Fofack, Hippolyte, 2009. "Determinants of globalization and growth prospects for Sub-Saharan African countries," Policy Research Working Paper Series 5019, The World Bank.
    6. Fofack, Hippolyte, 2008. "Technology trap and poverty trap in Sub-Saharan Africa," Policy Research Working Paper Series 4582, The World Bank.
    7. Nombulelo Duma, 2007. "Sri Lanka's Sources of Growth," IMF Working Papers 07/225, International Monetary Fund.
    8. Krasnopjorovs, Olegs, 2013. "Latvijas ekonomikas izaugsmi noteicoŇ°ie faktori
      [Factors of Economic Growth in Latvia]
      ," MPRA Paper 47550, University Library of Munich, Germany.

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