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The Effects of the Internal Rate of Return on Economic Development: A Country-Level Study

In: Driving Complexity in Economic Development

Author

Listed:
  • Diego Gomez

    (Fundación ECSIM)

  • Sebastian Aparicio

    (Universitat Autònoma de Barcelona
    Universitat Autònoma de Barcelona)

  • David Urbano

    (Universitat Autònoma de Barcelona
    Universitat Autonoma de Barcelona)

Abstract

Investment decision variables such as internal rate of return (IRR) and return on equity (ROE) are crucial for correct decision-making in firms. However, given the difficulty of creating an IRR or ROE variable at the country level, the literature studying the effect of these variables on macroeconomics such as economic growth is almost non-existent. Thus, this chapter uses the country-level IRR variable from the Penn World Table version 10.0 and creates an approximate country-level ROE variable to study this relationship using a three-stage method, in which the first stage shows the determinants of country risk on IRR and ROE.

Suggested Citation

  • Diego Gomez & Sebastian Aparicio & David Urbano, 2023. "The Effects of the Internal Rate of Return on Economic Development: A Country-Level Study," Springer Books, in: Driving Complexity in Economic Development, chapter 7, pages 197-228, Springer.
    • Handle: RePEc:spr:sprchp:978-3-031-34386-5_7
    DOI: 10.1007/978-3-031-34386-5_7
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