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Changes in the portfolio and financing behavior of non-financial corporations (NFCs) over the post-1970 period in the U.S. economy point to the financialization of the NFC and raise the question of accompanying changes in fixed investment behavior. Using a firm-level panel, this article econometrically investigates the relationship between financialization and investment, exploring the implications of changes in financing behavior, increasingly entrenched shareholder value norms and rising firm-level demand volatility for NFC investment in the U.S. economy between 1971 and 2013. Shareholder value orientation is, in particular, identified as a characteristic of the post-1970 U.S. economy associated with a statistically and economically significant decline in NFC investment rates. The stock of financial assets, conversely, is found to be a positive correlate of firm investment. The analysis also highlights key differences by firm size. In particular, shareholder value norms are found to primarily influence the investment behavior of large NFCs, while rising volatility most substantially impacts small firms.

The purpose of this paper is to explain differences in the productivity of investment across 84 rich and poor countries over the period 1980–2011, and to test the orthodox neoclassical assumption of diminishing returns to capital. The productivity of investment is measured as the ratio of the long-run growth of GDP to a country’s gross investment ratio. Twenty potential determinants are considered using a general-to-specific model selection algorithm. Education, government consumption, geography, export growth, openness, political rights and macroeconomic instability are the most important variables. The data also suggest constant returns to capital, so investment and the determinants of productivity of investment differences matter for long-run growth.

Labor productivity is an important determinant of the wealth of national economies and standards of living, as its growth explains half of per capita GDP growth. We show that there are four worlds of productivity growth among industrialized countries, by decomposing labor productivity growth into multifactor productivity (MFP) growth and capital deepening. The four worlds that emerge from the analysis are: 1) human capital investment and MFP growth-dominant Nordic coordinated market economies (CMEs); 2) physical capital investment- and labor productivity growth-dominant liberal market economies; 3) continental CMEs whose moderately high human capital investments create decently high MFP growth, but whose low physical capital investments push down their labor productivity; and 4) South European countries with both low human capital investment and low productivity growth. The four worlds are a result partly of the countries’ human capital formation policies and economic growth strategies — different policies add differently to the components of labor productivity. Overall, we tie welfare production regimes to economic outcomes by showing that different human capital formation policies produce different economic outcomes.

This paper studies the dynamic effects of public investment on private capital accumulation in a general equilibrium macroeconomic model of a small open economy with factor-biased public capital. I show that public investment induces rather complex private capital dynamics—falling in the short and in the long run, but potentially increasing along transition—if public capital augments private capital and private inputs are gross complements in production. Whether private investment is crowded in or out during transition critically depends on parameters that are empirically hard to measure, such as the labor supply elasticity and the elasticity of substitution between private inputs—a small increase in the latter from 0.5 to 0.6, for instance, turns a totally negative transitional effect into a predominantly positive one. These results help rationalize the lack of empirical consensus on the relationship between public and private investment.

This investigation analyses the impact of foreign direct investment (FDI) on economic growth by considering the model country Singapore. This was primarily motivated by robust increases in economic performance in the Singapore economy, which was accompanied by similar patterns in foreign direct investment. Such distinct patterns have generated different perceptions and no consensus has yet been achieved in terms of the impact of foreign direct investment on economic growth, particularly with regards to Singapore. The study employed a Vector Error Correction Model on the period between 1980 and 2014, considering World Bank data statistics. The results from the study show strong evidence of the absence of a long-run relationship or causality that runs from gross savings, foreign direct investment, trade and gross fixed capital formation. It was observed that the variables in question do not Granger cause each other in the long-run. However, negative associations between GDP and gross savings as well as FDI and international trade were observed, although Gross fixed capital accumulation was found to be positively related to economic growth.

This article analyzes the main indicators of Russia’s economic development (gross domestic product, unemployment rate, consumer price index, fixed investment, and the growth rate of industrial prod...

Urban growth consists of horizontal and vertical expansions. An integrative framework for estimating horizontal and vertical expansions of city urban areas using Landsat images was presented. It includes following steps: 1 a spectrum-based classifier here Support Vector Machine is first used to preclassify Landsat images; 2 the spectral similarity-enhanced Markov chain random field cosimulation model is then applied to postclassify the preclassified images and detect building shadows; and 3 a morphological operator based on spatial logic reasoning is used to estimate mid-rise or taller buildings MTBs from detected shadows. Both horizontal urban growth and vertical urban growth in the main city area of Guangzhou for the time period of 1993–2013 were detected. The accuracy of identified MTBs by shadows was validated to be 78.1% on average for 2013. The case study indicates that Guangzhou had undergone both horizontal and vertical urban growth from 1993 to 2013, and vertical urban growth followed horizontal urban growth successively. The relationships between the horizontal and vertical urban growth and three major socioeconomic factors during the studied period were analysed. Results indicate that both the total area of built-up areas and the total area of detected MTBs are significantly correlated with population density, real gross domestic product, and fixed investment i.e. investment in fixed assets such as land, buildings, respectively. While population density is the major driving force of horizontal urban expansion, fixed investment is the major driving force of vertical urban expansion for the city as a whole. Although the method is not perfect currently in detecting MTBs in various situations and the case study is mainly exploratory, the proposed framework and the case study can be helpful in quantitatively exploring the horizontal urban growth and vertical urban growth of a city and their causes.

This study examines the impact of financing conditions on firm behavior in the Gulf zone over the period 2005–2014 using a panel of 357 firms. As a main consequence of market frictions, financing constraints have sizeable impacts on how CFOs behave and design their financial policies. We use a sample of firms from the six GCC countries and specify a range of investment equations to explore the behavior of cash flow sensitivities to fixed investment, working capital, and R&D. Our results show that GCC firms seem to have less costly financing sources when financing their inventories and/or holding cash than investing in fixed assets and R&D. Our results indicate that there is heterogeneity of the impact of financing conditions on the behavior of GCC firms. The Omani and Bahraini firms seem to be more oriented toward building their working capital during periods of financial distress in order to finance their fixed and R&D investments. This behavior does not seem to be consistent with the other count...

Objective - This paper explores the relationship between working capital management (WCM), profitability and capital structure. A preliminary framework provides an understanding of the role of WCM components with capital structure and profitability. Methodology/Technique - From the review of empirical studies it is confirmed that WCM is a main component in the financial aspects of the firms as even though WCM is targeted for the short-term decisions it has effect on the firm for the long-run. Findings - Companies need to use working capital policy and procedures in order to navigate performance. Emphasizing on WCM would lead to formal cost controls and performance together with firm's growth and productivity. The framework is set to help financial manager of the firms to balance the costs and benefits of debt and equity and reduce common obstacles on managing cash flows for long-term fixed investment. Novelty - The preliminary framework is original and unique that will contribute towards the enrichment of relevant literature. Practically, this study contributes to provide a better understanding of the managers and enable them to apply WCM strategies and make sure the firm is able to meet the stakeholder requirements. Type of Paper Review Keywords: Working Capital Management; Capital Structure; Profitability; JEL Classification: O16, M41.

We explain the differences in Tobin's q among Japanese manufacturing firms after the bubble burst in the early 1990s based on their physical and R&D capital investment. We calculate (estimate) the contribution of each block of physical and R&D capital investment to explain differences in Tobin's q by estimating each capital's unit's shadow values and their contributions to the differences in the realized Tobin's q. The steady growth of R&D capital after the bubble burst increased the R&D capital relative to the physical capital. The combined effect of this relative stock ratio and R&D capital's shadow value explain the high Tobin's q in highly R&D intensive firms. Conversely, Tobin's q is an inappropriate measure of physical capital investment in such highly R&D intensive firms.

This paper focuses on the coordination problem among borrowing countries imposing controls on capital infl ows. In a simple model of capital flows and controls, we show that inflow restrictions distort international capital flows to other countries and that, in turn, such capital flow deflection may lead to a policy response. We then test the theory using data on inflow restrictions and gross capital inflows for a large sample of developing countries between 1995 and 2009. Our estimation yields strong evidence that capital controls deflect capital flows to other borrowing countries with similar economic characteristics. Notwithstanding these strong cross-border spillover effects, we do not find evidence of a policy response.

Degrees of firm internationalization vary across industries and over time, depending on a number of factors. In this paper, I hypothesize that firms mitigate the investment risk resulting from having large amounts of capital investment by expanding their business internationally. Using a large panel sample that covers non-financial firms listed in the US during the period 1990–2013, I find that capital investment negatively affects the internationalization level. The negative effect of capital investment on internationalization levels is evident for (1) large firms, (2) firms with large fixed assets, (3) firms with small and large capital investment, and (4) firms with non-positive sales growth rates. In addition, the relation between capital investment and the degree of internationalization is non-linear and varies over time. I also find that the effect is negative prior to the burst of the IT bubble in 2001, neutral during the burst of the IT bubble and the non-crisis period, and positive during and after the 2007 global financial crisis.

Modular plant design is an approach for making chemical production more flexible and more efficient. Different approaches for modular plant design have been developed, for example in the CoPIRIDE or F³ factory project. They have in common that reductions in design and construction expenses for modular equipment and its assembly are expected e.g. by preassembly of modules in a workshop under controlled conditions resulting in less field work on the construction site for erection. However, the main disadvantage of the modular approach is the loss of economy of scale. Thus, the effective impact of the modular concept concerning the fixed capital investment has to be investigated. In this article, a new approach for estimating fixed capital investment of modular production plants will be presented and applied using a generic example. Based on the results we expect that positive effects through modularization on engineering and construction costs can nearly compensate the loss of economy of scale. In the investigated example investment costs of the modular plant are 12% higher than for the comparable conventionally built plant. Such increase could allow other effects that are attributed to the modular concept to be employed to advantage. That would be an economic improvement and a reduction of investment risk in view of the modular plant’s life cycle.

The article estimates the level of investment readiness of Ukraine's economy for the new industrialization. Macroeconomic analysis has shown that the lack of investments is caused by significant decapitalization of the economy as a whole and in particular the non-financial corporations. The dominating trends towards reduction of the rate of net savings and the losses of capital reflect the sorry state of the real sector. The instability of financial conditions of the companies causes lack of equity and debt bondage, and prevents them from maintaining a proper level of gross savings, and hence that of gross fixed capital formation. The high rate of debt bondage of the companies combined with ultra-high lending rates lead to increased costs of servicing and repayment of the debts, payment of property incomes, rise in production costs and consequently reduction of financial results. Such as financial results are the source of savings and the tax base their decrease causes the further reduction of investment resources in the economy and budget revenues. Due to the long-term shortfall of gross disposable income in the real sector, which was caused by disruption of the economically grounded distribution of income among the institutional sectors and withdrawal of capital from economic turnover owing to shadowing and growing share of the offshore economy, the narrowing of the main sources of the fixed capital formation and shortage of investment resources in the economy happens. As a result, instead of investment progress, which is necessary for the neo-industrialization, there is an investments decline. The author proposes various conceptual approaches to reviving investments for the transition to the model of economic development based on new industrialization.

As a developing country, China faces the dual challenges of economic development and environment protection. This study analyzes whether the Chinese government will be able to implement this win-win goal and how to achieve it in 2020. The results show that: (1) The annual contribution rates to GDP of comprehensive factors, human capital, fixed capital, fossil energy, and non-fossil energy during 1991–2013 were 33.97%, 14.17%, 15.47%, 14.91%, and 21.47%, respectively. China's economic growth mainly depends on fixed capital investment and the output elasticity of human capital to GDP is the highest. (2) Fossil energy consumption could be reduced by increasing human capital investment based on the substitution elasticity of human capital for fossil energy. Simultaneously, the technological progress of fixed capital and fossil energy is slower than that of non-fossil energy, which is conducive to the dual goals of economic growth and carbon emissions reduction. (3) To reach these goals in 2020, the inputs of human capital, fixed capital, fossil energy, and non-fossil energy must increase by 12.05%, 16.89%, 1.29 times, and 74.67% of the 2013 levels by 2020. (4) This study analyzes the means and conditions for China to meet their goal in terms of these constraints and finds that technological progress is the key to meeting the economic growth and carbon emissions goals in 2020.

The intensity and efficiency of fixed investment in the manufacturing industry are among the basic factors of sustainable GDP growth and structural changes implementation. The developing and transition countries, with low GDP per capita, cannot catch up with the developed economies without accelerated growth and increased intensity and efficiency of investment in the manufacturing industry. For that reason, this paper's research focuses on the implications of fixed investment in the manufacturing industry of Serbia. The objective of this paper is to highlight how significant it is to efficiently implement investment policy, as well as how important investment is as a means of conducting the industry policy. The central question refers to the effects of investment in the fixed assets of the manufacturing industry of Serbia. It can be concluded that, despite its growth, the investment remains low in comparison with the development needs of both the economy and the manufacturing industry. In the forthcoming period it is necessary to increasingly rely on one's own strengths, domestic savings, and to boost the efficiency of investment aimed at technological modernization, growing productivity and competitiveness of the manufacturing industry in Serbia.

Since 2003, China's central government has allocated more construction land-use quotas to inland provinces than elsewhere in an attempt to balance the growth gap between its coastal and inland regions. Here, firm-level data from 2001 to 2007 were used to determine how this change in land policy has affected firms' investments and housing prices. Results have shown that cities in which land-use quotas decreased experienced faster housing price growth than the cities in which land-use quotas increased after 2003. This sharp change in policy also highlighted two major channels of the effects of housing prices on investment by firms. The results show that higher housing prices increased firms' investment by providing a source of more valuable collateral, while crowding out fixed capital investment. The net effect of housing prices on investment is negative and limiting economic growth.

This section is devoted to exploring the main sources of China’s economic progress in the historical context. It refers to the impact of strategic development programs, to which are fixed investments in economic recovery long-term subordinated, as a crucial internal precondition. It emphasises the importance of national specificities and the impact of other fundamentals of its growth, which distinguish it from their structure and intensity of use in market economies (education, participation of science and research, production of sophisticated products and services, etc.).

This research paper presents the key elements of the strategic project &ldquo, European Capital of Culture 2019&rdquo, initiated by the city of Matera in 2014. Through the &ldquo, big event&rdquo, defined by the combination &ldquo, diluted time/diffuse space&rdquo, the &ldquo, Citt&agrave, dei Sassi&rdquo, UNESCO World Heritage since 1993, is innovating the symbolic, material, and organizational levels of all the Basilicata municipalities whose tourist resources were almost unknown both at national and international levels, thus showing high resiliency, i.e., flexibility, inclusiveness, integration, and initiative. Through a self-centered and sustainable model of tourist accommodation that minimizes the infrastructure fixed capital investment aiming, at the same time, to increase collective empowerment processes, it is planned to accommodate about 700,000 &ldquo, temporary citizens&rdquo, who, by adopting an active and participative approach, wish to live a unique and unrepeatable identity experience in the Lucanian community instead of being mere spectators. Special attention is paid to &ldquo, virtual&rdquo, communication by using the world wide web not only as a showcase to promote the bottom-up identification and enhancement process of the heritage, but also as a tool to manage contacts with potential visitors in order to avoid any adverse impact of the event on the environmental and cultural components of the city and of the regional planning.

The economic reform process in China was placed in jeopardy during 1988-1989 by the outbreak of very high inflation. This chapter examines the basic trends in fiscal policy, economic reform, and monetary policy in China. The changing position of state-owned industry should be considered in the context of the economic reform strategy followed in China. The reform strategy adopted can be characterized as a "dual track" economic system, used as a transitional form in the creation of a market economy. Unable to rationalize financial relations in the state sector, reformers opted for marketization at the margin. The government is unwilling to raise urban food prices because of fear of inflation and is unwilling to allow energy costs to rise to market levels, since this would accelerate the erosion of their revenue sources in state-run industry. Indirect evidence is provided by the gradual convergence in the composition of fixed investment funded by the central government and that funded by bank lending.

This data article provides estimates on the Russian regions' aggregate free cash flow, which is not covered by national statistics of major countries. A proper microeconomic model was adapted to regional level data to derive a synthetic indicator of a regional economy's performance. The data contributes to the set of regional performance measures thus enabling a new look at studies of economic growth and development. Conventional economic growth indicators, such as GDP, fixed capital investment or industrial output, are widely criticized since they can have negative values only in terms of growth rates thus showing no evidence of value creation or deterioration. Our data on regional free cash flow eliminates this drawback. Keywords: Regional performance, Economic development, Free cash flow, Economic value, Regional economy

It is of great significance to investigate the determinants of urban form for shaping sustainable urban form. Previous studies generally assumed the determinants of urban form did not vary across spatial units, without taking spatial heterogeneity into account. In order to advance the theoretical understanding of the determinants of urban form, this study attempted to examine the spatial heterogeneity in the determinants of urban form for 289 Chinese prefecture-level cities using a geographically weighted regression (GWR) method. The results revealed the spatially varying relationship between urban form and its underlying factors. Population growth was found to promote urban expansion in most Chinese cities, and decrease urban compactness in part of the Chinese cities. Cities with larger administrative areas were more likely to have dispersed urban form. Industrialization was demonstrated to have no impact on urban expansion in cities located in the eastern coastal region of China, which constitutes the country&rsquo, s most developed regions. Local financial revenue was found to accelerate urban expansion and increase urban shape irregularity in many Chines cities. It was found that fixed investment exerted a bidirectional impact on urban expansion. In addition, urban road networks and public transit were also identified as the determinants of urban form for some cities, which supported the complex urban systems (CUS) theory. The policy implications emerging from this study lies in shaping sustainable urban form for China&rsquo, s decision makers and urban planners.

Macroeconomic situation in 2017–2018 was marked by the outstripping growth rates of fixed investments relative to GDP performance and final consumption of households. In 2018, amid fixed investments increase by 4.3 percent, GDP growth constituted 2.3 percent relative to the corresponding period of the previous year. However, despite the upward trend of fixed investments seen in 2017–2018, the economy has retained the impact from the acute investment crisis of 2014–2016. Vis-a-vis pre-crisis 2012 fixed investments registered in 2018 came to merely 97.3 percent and the construction work volume to 95.7 percent.

For two decades, the lack of private investment has been one of Europe’s biggest economic weaknesses, undermining productivity, hampering growth potential, and damaging its competitiveness. Moreover, different financial conditions across the euro-area Member States have contributed to diverging levels of investment and economic growth, while fragmented capital markets have aggravated financial instability by reducing risk-sharing and shock absorption through private equity markets. Many hopes were pinned on Capital Markets Union as a policy to address both Europe’s underinvestment and a redistribution of excessive savings throughout the euro area. The European crisis after 2011 has worsened the situation, increasing uncertainty and fragmenting the European credit market along national lines. The consequence was a widening of the structural investment gap between Europe and the US. Between 2008 and 2015, gross fixed investment had declined by around 15 per cent in the euro area and the investment rate had dropped by around four percentage points. In the US, on the contrary, the investment rate had gradually recovered from its trough in the aftermath of the financial crisis. At the end of 2014, the European Commission launched the initiative for a Capital Markets Union intended to provide Europe with stronger financial integration and risk sharing mechanisms, contributing to macroeconomic stability and more productive allocation of national savings.

Purpose: The article presents the results of an empirical analysis of the economic growth of Russian cities with a population of over 1 million people (megacities). Design/Methodology/Approach: The analyzed indicator is the city product calculated according to the UN methodology for the period from 2010 to 2016. The paper analyses the process of β- and σ-convergence across Russian megacities using methods of spatial econometrics in addition to the traditional β-convergence techniques from the neoclassical theoretical framework. Findings: The dynamics of the coefficient of variation confirmed the presence of σ-convergence in city product. Empirically, positive spatial autocorrelation has been confirmed. Beta-convergence for Russian megacities is found to be significant and the spatial location of megacities significantly affects β-convergence. Control factors such as fixed capital investment per capita in 2010, average retail volume per capita in 2010, average annual number of employees of enterprises and organizations in 2010 and the dummy variable introduced for “federal cities” Moscow and St. Petersburg are all found to have positive and statistically significant impact on economic growth. Practical Implications: Policymakers may take the results into account under the planning of economical strategies for megacities and regions in Russia in order to facilitate the regional economic growth and the speed of convergence. Originality/Value: The main contribution of the study is the consideration of the economical growth for the megacities and not for the regions as it often used to be the case in similar studies. The important finding is that megacities‘ economies do converge and the influence of control factors is pronounced., peer-reviewed

We estimate the effect of external financial constraints on fixed investment intentions for UK manufacturing by size of firm distinguishing between normal effects and those since the financial crisis began in the UK in 2007. Our financial constraints data are constructed to reflect only supply-side influences i.e. they are independent of cyclical conditions that may affect the demand for credit. Using consistent quarterly long run survey data with IV estimation, we find that only for the crisis period are financial constraints important for large firms and then only for periods of falling business optimism. By contrast, small firms experienced continuous constraint but with no additional supply side effects during the crisis. A policy implication for the UK is that the key to resumed lending may lie not so much with bank behaviour as with the demand conditions that firms face, in particular the sustainability and certainty of demand.

There is no consensus on how strongly the Tax Cuts and Jobs Act (TCJA) has stimulated U.S. private fixed investment. Some argue that the business tax provisions spurred investment by cutting the cost of capital. Others see the TCJA primarily as a windfall for shareholders. We find that U.S. business investment since 2017 has grown strongly compared to pre-TCJA forecasts and that the overriding factor driving it has been the strength of expected aggregate demand. Investment has, so far, fallen short of predictions based on the postwar relation with tax cuts. Model simulations and firm-level data suggest that much of this weaker response reflects a lower sensitivity of investment to tax policy changes in the current environment of greater corporate market power. Economic policy uncertainty in 2018 played a relatively small role in dampening investment growth.

In 2005, China took an important step in its privatisation process by initiating the Split Share Reform, whereby state-owned shares became tradeable. As a consequence, there was a significant rise in private holdings of shares of listed companies which previously had high state ownership. This paper considers the impact of this change, by examining how the SSR impacted on firms’ capital investment. Using a value-maximising approach, we empirically model Chinese firms’ fixed capital investment recognising that this was a period of global instability caused by the Global Financial Crisis. Controlling for its effects, we are able to consider if and how the reform influenced firms’ behaviour.

In 2018, the growth rate of GDP in Russia (2.3 percent) represents a record high of per annum economic growth rate since 2012. This year-end result is notably above the estimates offered by a majority of international financial organizations (the IMF, World Bank, the OECD), as well as by Russian banking analysts and experts. The volume of GDP in nominal terms surged above RUB 100 trillion, to RUB 103,626.6 billion (or approximately USD 1,657 billion when recalculated at the annual average RUB-to-USD rate). Growth was also displayed by most of the basic indicators: thus, the industrial production index in 2018 gained 2.9 percent, freight turnover – 2.9 percent, retail trade turnover – 2.6 percent. Special note should be made of the movement pattern of fixed investment: according to preliminary estimates released by Rosstat, its annual growth index amounted to 4.3 percent. Considering the fact that, in 2017, the amount of fixed investment in constant prices increased by 4.8 percent, it can be said that over the period 2017–2018, the investment sphere indeed experienced intense growth; however, the main contribution to that growth was made either by budget-funded investments (the completion of building construction projects in preparation for the World Cup; the construction of the bridge to the Crimea; the Sabetta Airport and Seaport; and infrastructure in the city of Moscow), or investments by state-owned companies (Nord Stream 2 natural gas pipeline; Yamal LNG; etc.)

This paper investigates the real effects of short-term financial constraints in the light of the working capital channel: cash credit constraints may force SMEs to forgo investment opportunities in order to finance their working capital needs. Building on unique indicators of cash and investment credit constraints derived from survey data, I find that: (1) short-term credit constraints are as important as long-term ones in SMEs' investment decisions; (2) the detrimental effect of cash credit constraints on corporate investment is even stronger for firms with higher working capital needs; (3) the negative relationship between working capital and fixed investment is associated with short-term financial frictions; and (4) only liquid SMEs are able to offset short-term financial frictions by adjusting their accounts receivable and inventories.

In this article we analyze the financing constraints-investment link for the case of Turkey between 1996 and 2013. As different from the existing studies on Turkey we use a more comprehensive data set that includes both publicly-traded and privately-owned firms and analyze the differences in constraints across small- and medium-sized firms and large firms. In addition to the commonly used cash-flow sensitivities we use alternative measures of constraints build from multiple firm specific variables. We find that small- and medium-sized manufacturing firms in Turkey are subject to financing constraints regardless of the measure used.

The current paper explores the relation between managers’ risk attitude and cost stickiness behavior and the role of demand uncertainty as a moderation variable in the Egyptian business environment. Managers’ risk attitudes are measured using Bo and Sterken (2007) proxy measure [Bo, H., & Sterken, E. (2007). Attitude towards risk, uncertainty, and fixed investment. The North American Journal of Economics and Finance, 18(1), 59–75]. Demand uncertainty is measured by the standard deviation of firms’ sales over the sample period. The study sample includes 114 Egyptian-listed firms over a 14-year period (2004 - 2017) which results in 1,419 firm-year observations. The study models are estimated using the ordinary least squares (OLS) with a fixed-effects model. Findings show that in the presence of high demand uncertainty, risk-averse managers respond to sales decrease by cutting resources which lowers cost stickiness. One of the limitations is that some factors like firms’ policies, corporate governance mechanisms, and board of directors’ characteristics could dilute the effect of manager’s risk attitude on cost stickiness. The current research emphasizes the importance of considering the firm’s operating environment when selecting a manager for the firm, and the role of directed training to align the manager’s personal characteristics with the firm's objectives. The current research contributes to the previous literature by documenting the effect of manager’s risk attitude on cost stickiness and the role of a firm’s demand uncertainty as a moderating variable between these two variables.

One of the most important tasks of any state is to ensure stable economic growth. Banks can play an important role in performing this task, primarily by providing loans. The purpose of the study is to identify the relationship between indicators of banks’ lending activity and general indicators of economic development. Index of physical volume of GDP and index of physical volume of fixed capital investment were selected as resultant economic indicators, and growth rate of debt on bank loans (overall and by loan types), the share of loans in fixed capital investment, and the ratio of debt on bank loans to GDP were used as factor variables. The study of the dynamics of these indicators showed that the trajectory of economic indicators has a general tendency to decrease their values; the dynamics of economic indicators depends more on bank lending to legal entities than on lending to individuals, and often reflects the change in the share of loans in fixed capital investment with a time lag; economic growth is more strongly influenced by bank lending to legal entities than by lending to individuals. The revealed patterns indicate the need to develop a monetary policy aimed at stimulating corporate lending and moderate curbing consumer lending.

Highlights • Africa’s agricultural productivity depends on the formation of physical capital. • Capital formation is imperative to overcome potential post COVID-19 food insecurity. • Instantaneous impact of agricultural ODA on agricultural fixed capital formation. • Corruption and rule of law do matter for agricultural ODA inflows to SSA. • ODA is necessary to accelerate agricultural investments and enhance food security., The formation of physical capital in Sub-Saharan Africa (SSA) in agriculture is imperative to help the continent (1) overcome the effect of the COVID-19 pandemic on food insecurity and (2) still be on track towards achieving the Sustainable Development Goals (SDGs) of “No poverty” and “Zero hunger” in the midst of the COVID-19 pandemic. Using country-level data on 40 SSA countries from 1996 to 2014 and rainfall deviations as an instrument for agricultural official development assistance (ODA) in fixed-effect estimation settings, this paper examines the ‘instantaneous’ impact of agricultural ODA on agricultural fixed capital formation in SSA. The question here is whether aid to agriculture does translate instantaneously to building fixed capital urgently needed to address the effect of any potential crisis on food insecurity. Measuring agricultural fixed capital as fixed investments in farm machinery, dams, industrial buildings for agricultural and agro-processing, fences, ditches, drains, etc., we find that capital formation in SSA agriculture improves instantaneously with agricultural ODA inflows. Second, we find that even though rainfall deviations are associated with agricultural ODA inflows to SSA, institutions particularly those designed to control corruption and strengthen rule of law, do matter for agricultural aid inflows to SSA. These results suggest that agricultural ODA is necessary to accelerate agricultural investments and achieve food security. Our results are robust to sensitivity analysis on the specification of the instantaneous model.

The purpose of this research is to demonstrate through a techno-economic assessment that aniline can be industrially produced using a profitable and inherently safer process than the ones currently employed. The aniline production process was designed using process simulation software. From this, the mass and energy balances were determined, the equipment sizing was performed and the net present value (NPV) was calculated to be USD 93.5 million. Additionally, a heat integration analysis was carried out in order to improve process profitability, obtaining a new NPV of USD 97.5 million. The economic sensitivity analysis showed that the process could withstand fixed capital investment changes of up to +89%, weighted average cost of capital changes between 16–24% and a decrease in cyclohexylamine demand of up to 44%. The conceptual design is still profitable when aniline price is varied in a range of 1224–1840 $/t and phenol cost in a range of 815–1178 $/t., Chemical engineering; Industrial Chemistry; Safety engineering; Process Modeling; Computer-Aided Engineering; Phenol to aniline; process design; process safety; energy analysis; economic evaluation

Bio-fuel can be used to help transition from a petroleum-based society to a bio-based society. Ever since the China Development and Reform Commission suspended the approval of crop processing programs, second-generation bio-ethanol research and industrialization processes have attracted significant attention. In 2020, bio-ethanol production is predicted to reach 10 million tons. Currently, there are a few domestic enterprises that have established different scaled pilot or demonstration bases for cellulosic ethanol, which reduce the cost of ethanol by continuously improving pretreatment and hydrolysis techniques. In the next three years, these enterprises will realize large-scale commercial production. Given the practical problems in cellulosic ethanol plant construction and operation ( e.g ., marketing price variation and difficulties in feedstock collection), this paper began with the concept of a “whole-crop refinery” and presented a solution to the integration of industry and agriculture as well as multi-crop refining. This paper then took the whole-crop refining system of corn as an example and presented an analysis of the logistics, energy flow, and economical efficiency of the system. The results demonstrated that the integrated system could properly reduce the required fixed investments in production equipment, shared utilities, and wastewater treatment facilities, as well as reduction of energy consumption. Although the proposed system has several problems, it brings the long-term goal of large-scale commercial application closer than ever.

This article examines the impact of capital formation on economic growth in India covering the period from 1970 to 2012. This paper traces a long-run equilibrium relation between capital formation and economic growth and other control variables by using autoregressive distributed lag (ARDL) model. The error correction (ECM) model shows that the capital formation, trade openness, exchange rate and total factor productivity positively affect the economic growth and the inflation negatively affects the economic growth in the short run. It is recommended that government increases the level of capital formation in order to achieve a higher level of economic growth.

This paper employs a novel firm-level dataset that combines financial accounts of German firms with data from a business survey to shed new light on the demand for capital. The empirical analysis employs firm-specific indicators in order to explore the effects of sales, the cost of capital and indicators of the business climate, which are used by the ifo Institute to provide a leading indicator for the German economy. The empirical results support a robust significant effect of a firm’s cost of capital on the stock of capital with an elasticity not significantly different from –1. Controlling for sales, a good rather than normal business situation is found to be associated with about 8 % higher investment.

This article discusses the treatment of fixed capital in the classical theory of price. Sraffa uses non-linear depreciation of ‘physical’ capital that equalizes all annual profit rates individually, but violates the proportionality of monetary machine value reduction and physical use-up on an annual basis. One alternative is to apply simple linear depreciation that has equal annual fixed capital costs. The key for consistency is that the internal rate of return on fixed capital investments throughout the fixed asset lifetime must be equated with the normal profit rate. A second alternative is to use ‘monetary’ capital, where the ‘correct’ amortization charges depend on the ability of the accumulated depreciation fund to earn interest. Among these valid alternative methods are the original proposals of Marx and Torrens, which were dismissed falsely and prematurely by Neo-Ricardian economists. These alternatives are shown here to imply fundamentally different prices of production. For all methods, t...

In this study I investigate what impact monetary policy shocks have on firms’ fixed investment, the less liquid portion of gross investment that requires more planning. I account for firms facing financial constraints firms by utilizing a common measure of asset size, which is used in previous literature. I use two exogenous, continuous series of monetary policy shocks to show that constrained firms have statistically different responses to policy than unconstrained firms. Specifically, I find that constrained firms’ fixed investment significantly responds more to monetary policy shocks than unconstrained firms.

One of the core elements of the neoclassical growth theory is that poor countries have low capital-labor ratios but have higher marginal products of capital than the rich countries. This means the low-income countries experience faster growth rates and become a reason for allowing capital, goods, and technology can move across countries. Assuming that the labor intensive countries have higher returns on capital, then investment will flows into those countries and encourage higher economic growth. However, in fact capital flows seems to go in the opposite direction. A country with abundant capital can expand its capital-intensive sectors and export their goods along with trade liberalization. Consequently, the returns to capital in its capital-intensive sectors rise and a greater demand for investment induces higher capital inflows from abroad. Those predictions push developing countries to change their labor intensive industrial structures and become more capital intensive, to encourage their economic growth. This paper examines how capital intensity and openness affect economic growth using data from the ASEAN 5 countries data. The issue of endogeneity and unobserved heterogeneity, as major problems in a data panel, are addressed by the fixed effect method and the Feasible General Least Square (FGLS). Capital flows appears to be the most important source of economic growth, whilst trade is found to have a limited role. The interaction between capital intensity and the openness indicator do not indicate significant effects. Generally, there is no evidence that the more outward-oriented countries with high levels of capital intensity experiences higher economic growth.

Purpose– The purpose of this paper is to estimate the impact of Internal Revenue Code cost recovery provisions – Section 179 and “bonus depreciation” – on farm capital investment.Design/methodology/approach– The authors construct a synthetic panel of data consisting of cohorts of similar farms based on state and production specialization using the USDA’s Agricultural Resource Management Survey for years 1996-2012. Employing panel data methods, the authors are able to control for time-invariant fixed effects, as well as the effects of past investment on current investment.Findings– The authors estimate statistically significant investment demand elasticities with respect to the Section 179 expensing deduction of between 0.28 and 0.50. A change in bonus depreciation, on average, had little impact on capital investment.Practical implications– The estimates suggest there is a modest effect of the cost recovery provisions on investment overall, but a stronger effect on farms that have more than $10,000 in gross cash farm income. There are other implications for the agricultural sector: the provisions may encourage technology adoption with its associated benefits, such as reduced cost of production and improved conservation practices. On the other hand, the policy could contribute to the growing concentration in production as large commercial farms expand their operated acreage to take advantage of increasingly efficient physical capital.Originality/value– To the authors’ knowledge, this is the first research to use a nationally representative dataset to estimate to impact of Section 179 and “bonus depreciation” on farm investment. The findings provide evidence of the provisions’ impact on farm capital purchases.

The paper deals with an estimate and analysis of the value of regional net fixed capital stock and the age structure of machinery and equipment in Czech agriculture. In order to perform such analysis, the official model of perpetual inventory method is transformed into the Markov chain model and applied on regional data separately. Regional net fixed capital stock is presented for the period of 2008-2013. The development of the average age of machinery and equipment comprises a potential indicator of the modernisation process in the industry. The analysis of the age structure is based on the structure heterogeneity indicator. For these purposes, the real age structure in each Czech region is compared with the theoretical stable and stationary structure. Currently, the most heterogeneous age structure of machinery and equipment occurs in Prague and the Karlovy Vary region.

The paper attempts to make a timely contribution to the debate on the status of business fixed investments in Indian private manufacturing firms. There are two key issues on which the debate hinges: lower presence of formal credit and, procedural and contractual rigidities. Lower presence of formal credit restricts or makes it costlier for a group of firms to incur investment expenditure that they would have incurred otherwise. Such firms predominantly rely on their internal funds for investment. Procedural and contractual rigidities, on the other hand, make almost all the investment projects undertaken, partially or completely, irreversible. Firms respond to such irreversibilities by aligning their investment to a relatively favorable time which, in turn, depends on the way firms process future uncertainty. The analytical exercise endogenously distinguishes between two investment regimes based on the access to external credit and uses a set of characteristics, along with different measures of uncertainty, to explain fluctuations in investment. The results provide three important observations. First, in the post-reform period there has been an adverse shift in the investment financing policy. Second, firms with inferior access to external credit are smaller, younger, pay less dividend, export less and belong to an industry with inferior demand than others. Such firms invest by running down their available cash flows and selling assets. Third, macroeconomic uncertainty depresses investment whereas microeconomic uncertainty has no impact on investment.