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Determinants of firms' investment behaviour : a multilevel approach

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  • Farla K.

    (UNU-MERIT)

Abstract

This paper investigates micro and macro determinants of firms investmentbehaviour using firm data from 101 developing and emerging economies. Asubstantial number of firms in our sample does not invest in fixed capital or investslittle 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 firms investment to sales ratio. Although we find that bothmicro and macro determinants explain investment behaviour, firms investmentbehaviour is heterogeneous in nature and has little dependency on a countrysmacroeconomic setting. In addition, we find that, on average, firms which arecompletely foreign owned have a relatively lower investment to sales ratio. Finally,we find evidence which suggests that the probability of investing is higher for firmslocated in countries with more property rights protection and control of corruptionand we find some evidence which suggests that foreign owned firms located incountries with good institutions invest relatively more.

Suggested Citation

  • Farla K., 2013. "Determinants of firms' investment behaviour : a multilevel approach," MERIT Working Papers 055, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
  • Handle: RePEc:unm:unumer:2013055
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    File URL: https://www.merit.unu.edu/publications/wppdf/2013/wp2013-055.pdf
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    References listed on IDEAS

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    Cited by:

    1. Joël CARIOLLE, 2016. "The voracity and scarcity effects of export booms and busts on bribery," Working Papers P146, FERDI.
    2. 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.

    More about this item

    Keywords

    Capital; Investment; Capacity; International Factor Movements and International Business; Macroeconomic Analyses of Economic Development; Microeconomic Analyses of Economic Development; Institutions and Growth;

    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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