Profitability and Investment: Evidence from India's Organized Manufacturing Sector

Deepankar Basu () and Debarshi Das ()
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Deepankar Basu: Department of Economics, University of Massachusetts, Amherst
Debarshi Das: Department of Humanities and Social Sciences, Indian Institute of technology, Guwahati

No 2015-14, UMASS Amherst Economics Working Papers from University of Massachusetts Amherst, Department of Economics

Abstract: Using a state-industry panel data set at the 3 digit national industrial classification (NIC) level of disaggregation for 19 major Indian states over the period 1983-84 to 2007-08, we analyze the contemporaneous and long run impacts of the rate of profit and its components - profit share, capacity utilization rate, and capacity-capital ration - on investment. Our results show that: (a) the rate of profit has both short and long run positive impacts on investment; (b) the profit share and capacity-capital ration have only long run positive impacts, and the capacity utilization rate has only a contemporaneous positive impact on investment.

Keywords: profitability; investment; manufacturing; India (search for similar items in EconPapers)
JEL-codes: B51 E12 E22 (search for similar items in EconPapers)
Date: 2015
New Economics Papers: this item is included in nep-hme and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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