Do Natural Resource Sectors Rely Less on External Finance than Manufacturing Sectors?
AbstractThe finding that industrial sectors differ in their dependence on external nance for sector-specific technological reasons and, thus, rely to a different degree on nancial development has become a major concept in studies conducted on both growth and trade. Although natural resources might play an important role in each of these elds, research on industries' financial dependence has been limited so far to manufacturing. By focusing on the natural resource sectors, the present paper aims to close this gap in its analysis. It rejects the common view that the natural resource industry in particular is less dependent on the financial system, and nds that the results of the analysis depend on the specific measure being applied. Measures relating investment and cash flow indicate high external dependence, while measures accounting for more short-term liquidity needs demonstrate rather low external dependence of natural resource firms. These results do not change considerably over time or across countries.
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Bibliographic InfoPaper provided by Sonderforschungsbereich 649, Humboldt University, Berlin, Germany in its series SFB 649 Discussion Papers with number SFB649DP2012-050.
Length: 23 pages
Date of creation: Aug 2012
Date of revision:
Financial development; external dependence; natural resources;
Find related papers by JEL classification:
- G20 - Financial Economics - - Financial Institutions and Services - - - General
- G30 - Financial Economics - - Corporate Finance and Governance - - - General
- O13 - Economic Development, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
- O14 - Economic Development, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
- O16 - Economic Development, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
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