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Determinants of firms' investment behaviour: a multilevel approach

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  • K. Farla

Abstract

This article investigates the determinants of firms' investment behaviour using firm data from 101 developing and emerging economies. A substantial number of firms does not invest in fixed capital or invests little relative to sales revenue. Using a multilevel probit model we study what factors trigger investment, and using a multilevel Heckman selection model we study what factors influence a firm's investment-to-sales ratio. We find that firms' investment behaviour has relatively little dependency on a country's macroeconomic setting. Additionally, we find that, on average, firms that are completely foreign-owned have a relatively lower investment-to-sales ratio. Finally, we find evidence which suggests that the probability of investing is higher for firms located in countries with more control of corruption and we find some evidence which suggests that partially foreign-owned firms located in countries with relatively less corruption have a relatively higher investment-to-sales ratio.

Suggested Citation

  • K. Farla, 2014. "Determinants of firms' investment behaviour: a multilevel approach," Applied Economics, Taylor & Francis Journals, vol. 46(34), pages 4231-4241, December.
  • Handle: RePEc:taf:applec:v:46:y:2014:i:34:p:4231-4241
    DOI: 10.1080/00036846.2014.955167
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Joel Cariolle, 2018. "Corruption determinants in developing and transition economies: Insights from a multi-level analysis," Post-Print hal-01823058, HAL.
    2. repec:mup:actaun:actaun_2016064062087 is not listed on IDEAS
    3. Joël CARIOLLE, 2016. "The voracity and scarcity effects of export booms and busts on bribery," Working Papers P146, FERDI.
    4. Joël CARIOLLE, 2018. "Corruption determinants in developing and transition economies: Insights from a multi-level analysis," Working Papers P229, FERDI.
    5. Maria Magdalena Turek Rahoveanu & Adrian Turek Rahoveanu & Cristian Popescu & Gheorghe Adrian Zugravu, 2015. "Entrepreneurial Potential In The Territory Gal Microregion Horezu Village From The Perspective Of 2014-2020," Risk in Contemporary Economy, "Dunarea de Jos" University of Galati, Faculty of Economics and Business Administration, pages 397-408.
    6. Joël CARIOLLE, 2018. "Corruption determinants in developing and transition economies: Insights from a multi-level analysis," Working Papers P229, FERDI.
    7. repec:spr:eurasi:v:8:y:2018:i:2:d:10.1007_s40821-017-0079-3 is not listed on IDEAS

    More about this item

    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • F20 - International Economics - - International Factor Movements and International Business - - - General
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth

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