Corporate investment in emerging markets: the role of commodity prices

Nicolas Magud and Sebastián Sosa

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

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-specific commodity export prices, using firmlevel 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 significant 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 inflows (search for similar items in EconPapers)
JEL-codes: E2 E3 F3 F4 (search for similar items in EconPapers)
Pages: 39 pages
Date: 2017-10-01
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Published in Economía, 1, October, 2017, 18(1), pp. 157 - 195. ISSN: 1529-7470

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http://eprints.lse.ac.uk/123340/ Open access version. (application/pdf)

Related works:
Journal Article: Corporate Investment in Emerging Markets: The Role of Commodity Prices (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:123340

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