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

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  • Yisheng Bu

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.

Suggested Citation

  • Yisheng Bu, 2006. "Fixed capital stock depreciation in developing countries: Some evidence from firm level data," Journal of Development Studies, Taylor & Francis Journals, vol. 42(5), pages 881-901.
  • Handle: RePEc:taf:jdevst:v:42:y:2006:i:5:p:881-901
    DOI: 10.1080/00220380600742183
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    References listed on IDEAS

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    1. 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. Katsiaryna Svirydzenka & Martin Petri, 2014. "Mauritius The Drivers of Growth—Can the Past be Extended?," IMF Working Papers 14/134, International Monetary Fund.
    2. Fofack, Hippolyte, 2008. "Technology trap and poverty trap in Sub-Saharan Africa," Policy Research Working Paper Series 4582, The World Bank.
    3. Pierre‐Richard Agénor & Devrim Yilmaz, 2013. "Aid Allocation, Growth And Welfare With Productive Public Goods," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 18(2), pages 103-127, March.
    4. Krasnopjorovs, Olegs, 2013. "Latvijas ekonomikas izaugsmi noteicošie faktori
      [Factors of Economic Growth in Latvia]
      ," MPRA Paper 47550, University Library of Munich, Germany.
    5. repec:sgm:jbfeuw:v:2:y:2017:i:8:p:54-83 is not listed on IDEAS
    6. Agénor, Pierre-Richard, 2016. "Optimal fiscal management of commodity price shocks," Journal of Development Economics, Elsevier, vol. 122(C), pages 183-196.
    7. Mercado, P. Ruben & Cicowiez, Martin, 2013. "Growth analysis in developing countries: empirical issues and a small dynamic model," MPRA Paper 58017, University Library of Munich, Germany.
    8. Nihal BAYRAKTAR & Emmanuel PINTO MOREIRA, "undated". "The Composition of Public Expenditure and Growth: A Small-scale Intertemporal Model for Low-Income Countries," EcoMod2008 23800009, EcoMod.
    9. 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.
    10. Raimundo Soto & Ilham Haouas, 2012. "Has the UAE Escaped the Oil Curse?," Working Papers 728, Economic Research Forum, revised 2012.
    11. Ben-Gad, Michael, 2012. "The two sector endogenous growth model: An atlas," Journal of Macroeconomics, Elsevier, vol. 34(3), pages 706-722.
    12. Neyapti, Bilin & Arasil, Yavuz, 2016. "The nexus of economic and institutional evolution," Economic Modelling, Elsevier, vol. 52(PB), pages 574-582.
    13. Djumashev, Ratbek & Abdullaev, Bekzod, 2017. "Crime, Transition, and Growth," MPRA Paper 80842, University Library of Munich, Germany.
    14. repec:eee:apmaco:v:321:y:2018:i:c:p:614-632 is not listed on IDEAS
    15. Jorge Thompson Araujo & Markus Brueckner & Mateo Clavijo & Ekaterina Vostroknutova & Konstantin M. Wacker, 2014. "Benchmarking the Determinants of Economic Growth in Latin America and the Caribbean," World Bank Other Operational Studies 21318, The World Bank.
    16. 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.
    17. Soares, Helena & Sequeira, Tiago Neves & Marques, Pedro Macias & Gomes, Orlando & Ferreira-Lopes, Alexandra, 2018. "Social infrastructure and the preservation of physical capital: Equilibria and transitional dynamics," Applied Mathematics and Computation, Elsevier, vol. 321(C), pages 614-632.
    18. repec:spr:laecrv:v:27:y:2018:i:1:d:10.1007_s40503-017-0051-8 is not listed on IDEAS
    19. Nombulelo Braiton, 2007. "Sri Lanka’s Sources of Growth," IMF Working Papers 07/225, International Monetary Fund.
    20. Channing Arndt & Sam Jones & Finn Tarp, 2016. "What Is the Aggregate Economic Rate of Return to Foreign Aid?," World Bank Economic Review, World Bank Group, vol. 30(3), pages 446-474.
    21. Jorge Thompson Araujo & Ekaterina Vostroknutova & Markus Brueckner & Mateo Clavijo & Konstantin M. Wacker, 2016. "Beyond Commodities," World Bank Publications, The World Bank, number 25321.
    22. Ahmat Jidoud, 2015. "Remittances and Macroeconomic Volatility in African Countries," IMF Working Papers 15/49, International Monetary Fund.
    23. Fofack, Hippolyte, 2009. "Determinants of globalization and growth prospects for Sub-Saharan African countries," Policy Research Working Paper Series 5019, The World Bank.

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