Corporate investment in emerging markets: the role of commodity prices

Magud, Nicolás E. and Sosa, Sebastián (2017) Corporate investment in emerging markets: the role of commodity prices. Economía, 18 (1). 157 - 195. ISSN 1529-7470

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• https://economia.lse.ac.uk/articles/10.3...

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.

Item Type:	Article
Official URL:	https://economia.lse.ac.uk/
Additional Information:	© 2017 LACTEA
Divisions:	LSE
Subjects:	H Social Sciences > HC Economic History and Conditions H Social Sciences > HG Finance
JEL classification:	E - Macroeconomics and Monetary Economics > E3 - Prices, Business Fluctuations, and Cycles E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Employment, and Investment F - International Economics > F4 - Macroeconomic Aspects of International Trade and Finance F - International Economics > F3 - International Finance
Date Deposited:	10 Jul 2024 14:21
Last Modified:	14 Sep 2024 10:03
URI:	http://eprints.lse.ac.uk/id/eprint/123340

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