Adjustment Costs, Irreversibility and Investment Patterns in African Manufacturing
IMF Working Papers, July 1, 1999
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- Adjustment Costs, Irreversibility and Investment Patterns in African Manufacturing
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Bibliographic details
- Authors: Arne L Bigsten
- Published: July 1, 1999
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451852257.001
Summary and main findings
- Examines dynamic patterns of investment in Cameroon, Ghana, Kenya, Zambia and Zimbabwe.
- Documents the importance of zero investment episodes and lumpy investment among manufactured firms.
- Finds that the proportion of firms experiencing large investment spikes is significant in explaining aggregate manufacturing investment.
- Evidence from descriptive statistics, average investment regressions modeling the response to capital imbalance, and transition data analysis indicate that irreversibility is an important factor considered by firms when making investment plans.
- The evidence is not unanimous; the paper proposes some explanations for the mixed results.
Data and methods
- Uses survey data on manufactured firms in the five countries listed above.
- Employs descriptive statistics, average investment regressions, and transition data analysis.
- Key methodological elements mentioned: modeling the response to capital imbalance, duration dependence, Logit models, nonparametric methods, and handling unobserved heterogeneity.
Key statistics and publication metadata
- Countries analyzed: Cameroon, Ghana, Kenya, Zambia and Zimbabwe.
- Number of authors: written by multiple authors (12).
- Pages: 53
- Volume: 1999
- Issue: 099
- Series: Working Paper No. 1999/099
- DOI: https://doi.org/10.5089/9781451852257.001
- Stock No: WPIEA0991999
- ISBN: 9781451852257
- ISSN: 1018-5941
Subjects and keywords (as stated)
- Subjects: Agroindustries, Econometric analysis, Economic sectors, Employment, Financial institutions, Labor, Logit models, Manufacturing, Stocks
- Keywords: adjustment cost, adjustment costs, African manufacturing, Agroindustries, cost function, duration dependence, Employment, firm investment model, investment, investment behavior, investment rate, investment spike, Logit models, mandated investment, Manufacturing, nonparametric methods, Stocks, Sub-Saharan Africa, unobserved heterogeneity, WP
Implications and interpretations highlighted
- Irreversibility matters for firm investment decisions in manufacturing in the sampled African countries.
- Lumpy investment and zero investment spells are prominent features of firm-level investment behavior and help explain aggregate investment dynamics.
- Mixed empirical results are acknowledged; the paper offers potential explanations for these divergences rather than asserting uniform conclusions.
IMF Working Papers. "Adjustment Costs, Irreversibility and Investment Patterns in African Manufacturing", By Arne L Bigsten, July 1, 1999. DOI: https://doi.org/10.5089/9781451852257.001
Content in this bundle
- Adjustment Costs, Irreversibilityand Investment Patterns in African Manufacturing - WP/99/99