Post-Transition Investment Behavior in Poland: A Sectoral Panel Analysis

September 1, 2005

Preview Citation

Format: Chicago

Zuzana Murgasova. Post-Transition Investment Behavior in Poland: A Sectoral Panel Analysis, (USA: International Monetary Fund, 2005) accessed September 18, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

Analyzing and projecting the behavior of macroeconomic variables in new EU member states presents special challenges, owing to limited time series of the available data. This paper presents an analysis of investment in Poland based on an underexplored sectoral data set. The determinants of investment are found to include lagged investment, lead production, relative unit labor costs, EU demand, corporate profitability, and greenfield FDI (foreign direct investment) inflows. Dynamic in-sample simulations indicate some overinvestment in 1997 compared with what the model would suggest, and a substantial underinvestment during 2000-2004. The model is then used to project future investment: while rapid investment growth is likely, it remains uncertain whether investment as a share of GDP will reach its peak levels on the late 1990s.

Subject: Balance of payments, Expenditure, Foreign direct investment, Labor, Labor costs, Public investment spending

Keywords: Baltics, Cost of capital, Determinants of investment, Eastern Europe, EU demand, EU membership, FDI, FDI inflow, Foreign direct investment, GDP deflator, Global, Greenfield FDI, IMF staff calculation, Investment, Investment activity, Investment decision, Investment equation, Investment growth, Investment project, Labor costs, Poland, Public investment spending, Sectoral panel analysis, User cost of capital, WP

Publication Details

Pages:

31
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2005/184
Stock No:

WPIEA2005184
ISBN:

9781451862034
ISSN:

1018-5941

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