Adjustment Costs, Irreversibility, and Investment Patterns in African Manufacturing
AbstractThis paper examines dynamic patterns of investment in Cameroon, Ghana, Kenya, Zambia and Zimbabwe, assessing the consistency of those patterns with different adjustment cost structures. Using survey data on manufactured firms, we document the importance of zero investment episodes and lumpy investment. The proportion of firms experiencing large investment spikes is significant in explaining aggregate manufacturing investment. Taken together, evidence from descriptive statistics, average investment regressions modeling the response to capital imbalance, and transition data analysis indicate that irreversibility is an important factor considered by firms when making investment plans. The picture is not unanimous however, and some explanations for the mixed results are proposed.
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Bibliographic InfoPaper provided by International Monetary Fund in its series IMF Working Papers with number 99/99.
Date of creation: 01 Jul 1999
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- Bigsten, Arne & Soderbom, Mans, 2005.
"What have we learned from a decade of manufacturing enterprise surveys in Africa ?,"
Policy Research Working Paper Series
3798, The World Bank.
- Arne Bigsten & Mans Söderbom, 2006. "What Have We Learned from a Decade of Manufacturing Enterprise Surveys in Africa?," World Bank Research Observer, World Bank Group, World Bank Group, vol. 21(2), pages 241-265.
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