Corporate Investment in Emerging Markets: The Role of Commodity Prices

Nicolas Magud and Sebastian Sosa ()

Economía Journal, 2017, vol. Volume 18 Number 1, issue Fall 2017, 157-195

Abstract: We examine how firm-level and country-specific macroeconomic variables determine corporate investment in emerging markets. In particular, we investigate how investment decisions are affected by changes in country-speci c commodity export prices, using rm- level data from 38 emerging markets for the period 1990–2013. We show that in addition to the standard firm-level variables (such as expected future profitability, cash flows, leverage, and new debt flows), commodity export prices play a signi cant role in driving corporate investment. Moreover, we show that the sharp decline in commodity prices since 2011 has been a key factor explaining the sizable slowdown in private investment growth during this period, especially in regions with large net commodity exporters.

Keywords: Investment; emerging markets; commodity prices; capital in ows (search for similar items in EconPapers)
JEL-codes: E2 E3 F3 F4 (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (10)

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Persistent link: https://EconPapers.repec.org/RePEc:col:000425:015831

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