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Regional Differences in the Determinants of Investment Decisions of Private Firms in Brazil

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  • Carlos Roberto Azzoni
  • Aquiles Kalatzis

Abstract

This study takes on an important part or regional growth, that is, the investment decisions of private firms. The question asked is: do corporations decide on investments in the same way in different parts of the territory? The paper analyses investments of 482 large Brazilian firms in the period 1996-2004. The role of sales, cash-flow, external financing, and working capital is investigated through regression analysis, following the literature on firm investment decisions. Regional dummies used to capture differences in the role of those determinants indicate that there are significant differences across regions. This is important information for regional development policy, for different mechanisms should be used in different regions in order to foster private investments.

Suggested Citation

  • Carlos Roberto Azzoni & Aquiles Kalatzis, 2006. "Regional Differences in the Determinants of Investment Decisions of Private Firms in Brazil," ERSA conference papers ersa06p161, European Regional Science Association.
    • Handle: RePEc:wiw:wiwrsa:ersa06p161
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    References listed on IDEAS

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    2. John Luke Gallup & Alejandro Gaviria & Eduardo Lora, 2003. "Is Geography Destiny? Lessons from Latin America," World Bank Publications - Books, The World Bank Group, number 14454, December.
    3. Carlos R. Azzoni & Luciana M.S. Servo, 2002. "Education, cost of living and regional wage inequality in Brazil," Review of Economic Design, Springer;Society for Economic Design, vol. 81(2), pages 157-175, April.
    4. repec:idb:brikps:59398 is not listed on IDEAS
    5. John Luke Gallup & Alejandro Gaviria & Eduardo Lora, 2003. "Is Geography Destiny? Lessons from Latin America," World Bank Publications, The World Bank, number 14454, September.
    6. Manuel Arellano & Stephen Bond, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 58(2), pages 277-297.
    7. Steven N. Kaplan & Luigi Zingales, 1997. "Do Investment-Cash Flow Sensitivities Provide Useful Measures of Financing Constraints?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 112(1), pages 169-215.
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