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Firm-level Perspective of Thailand's Low Investment Puzzle

Author

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  • Vorada Limjaroenrat

    (Bank of Thailand)

Abstract

Private investment in Thailand has been standing at a low level since the aftermath of the Asian Financial Crisis until present. Using firm-level data of virtually all registered firms in Thailand during 2001-2013, this paper finds that more than 60 percent of Thai firms have been undertaken negative net investment (invested at a rate slower than the depreciation rate) each year. Our regression results suggest that small firms and large firms have been facing different kinds of obstacles that ultimately led to persistently low investment at the aggregate level. For large firms, low or negative net investments are driven mainly by weak growth prospects and future uncertainties. For small firms, their investments are more likely hindered by supply-side constraints (lack of access to external finance) and negative net investments are driven mainly by inefficiency.

Suggested Citation

  • Vorada Limjaroenrat, 2016. "Firm-level Perspective of Thailand's Low Investment Puzzle," PIER Discussion Papers 42., Puey Ungphakorn Institute for Economic Research, revised Aug 2016.
  • Handle: RePEc:pui:dpaper:42.
    as

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    References listed on IDEAS

    as
    1. Gita Gopinath & Şebnem Kalemli-Özcan & Loukas Karabarbounis & Carolina Villegas-Sanchez, 2017. "Capital Allocation and Productivity in South Europe," The Quarterly Journal of Economics, Oxford University Press, vol. 132(4), pages 1915-1967.
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    4. Sai Ding & Alessandra Guariglia & John Knight, 2010. "Negative investment in China: financing constraints and restructuring versus growth," Working Papers 2010_31, Business School - Economics, University of Glasgow.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Firm-level Investment; Tobin?sQ; Resource Misallocation; Thai Economy;
    All these keywords.

    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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