Private Equity and Devaluation in Emerging Countries

Herrera-Echeverri Hernán (), Haar Jerry () and Salazar-Duque Juan Guillermo ()
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Herrera-Echeverri Hernán: Economics and Finance School, EAFIT University, Carrera 49 N° 7 Sur – 50, Medellin Colombia
Haar Jerry: Management & International Business, College of Business, Florida International University, 11200 SW 8th Street, MANGO 436, Miami, Florida 33199
Salazar-Duque Juan Guillermo: Economics and Finance School, EAFIT University, Carrera 49 N° 7 Sur – 50, Medellin Colombia

Global Economy Journal, 2017, vol. 17, issue 1, 26

Abstract: Using a comprehensive database with 51 emerging countries studied over a 13 year period, we find that devaluation increases the PE investment. More years of annual devaluation have a higher impact in promoting PE investment. Conclusions are confirmed for total and high technology PE investments, but not for early stage PE investments. Devaluation does not benefit PE investment in firms in the early stages of development. Devaluation itself is not sufficient to encourage the appetite of investors; however, some country-level competitiveness variables are indispensable for making a country more fertile for PE investment when a devaluation occurs – the high relevance of competiveness increasing in the long term.

Keywords: private equity; devaluation; country competitiveness; high technology investments; start-ups (search for similar items in EconPapers)
JEL-codes: F21 F31 G24 G28 (search for similar items in EconPapers)
Date: 2017
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DOI: 10.1515/gej-2016-0048

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