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Firm-level Perspective of Thailand's Low Investment Puzzle

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  • Vorada Limjaroenrat

Abstract

Private investment in Thailand has been standing at a low level since the aftermath of the Asian Financial Crisis until present. Using firm-level data of virtually all registered firms in Thailand during 2001–2013, this paper finds that more than 60 percent of Thai firms have been undertaken negative net investment (invested at a rate slower than the depreciation rate) each year. Our regression results suggest that small firms and large firms have been facing different kinds of obstacles that ultimately led to persistently low investment at the aggregate level. For large firms, low or negative net investments are driven mainly by weak growth prospects and future uncertainties. For small firms, their investments are more likely hindered by supply-side constraints (lack of access to external finance) and negative net investments are driven mainly by inefficiency.

Suggested Citation

  • Vorada Limjaroenrat, 2016. "Firm-level Perspective of Thailand's Low Investment Puzzle," PIER Discussion Papers 42, Puey Ungphakorn Institute for Economic Research.
    • Handle: RePEc:pui:dpaper:42
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    References listed on IDEAS

    as
    1. Sra Chuenchoksan & Don Nakornthab, 2008. "Past, Present, and Prospects for Thailand’s Growth: A Labor Market Perspective," Working Papers 2008-07, Monetary Policy Group, Bank of Thailand.
    2. Juan F. Rubio-Ramírez & Daniel F. Waggoner & Tao Zha, 2010. "Structural Vector Autoregressions: Theory of Identification and Algorithms for Inference," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 77(2), pages 665-696.
    3. Sai Ding & Alessandra Guariglia & John Knight & Junhong Yang, 2021. "Negative Investment in China: Financing Constraints and Restructuring versus Growth," Economic Development and Cultural Change, University of Chicago Press, vol. 69(4), pages 1411-1449.
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    More about this item

    Keywords

    Firm-level Investment; Tobin's Q; Resource Misallocation; Thai Economy;
    All these keywords.

    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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