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Title:Determinants of private investment behaviour in Ugandan manufacturing firms
Author:Aggrey, Niringiye
Year:2014
Issue:271
Pages:46
Language:English
Series:AERC research paper
City:Nairobi
Publisher:African Economic Research Consortium
ISBN:9789966023537
Geographic term:Uganda
Subjects:industry
investment policy
private sector
Link:https://www.asclibrary.nl/docs/399883037.pdf
Abstract:This study investigated the determinants of private investment behaviour using panel data. Evidence shows a combination of relatively low investment rates, high profit rates, but small profit effects on investment in Sub-Saharan Africa. Little was previously known about the determinants of investment in Ugandan manufacturing firms. This study adopted the flexible accelerator model with some modifications. The probit and tobit regression models were used in the analysis. The tobit regression results showed that debt capital ratio, financing of new investments with credit, and access to credit problems were consistently associated with the propensity to invest. Other factors found to be associated with the propensity to invest include ethnicity, firm size, corruption, skill problems and competition from imports. Sector effects also influence the decision to invest or not. It is clear from the results that low access to credit and inadequate skills are hindrances to manufacturing firms' investments in Uganda. If the private sector is to be the 'engine of growth' in the economy, then these constraints, among others, need to be given serious attention.
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