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Regional differences in the determinants of investment decisions of private firms in Brazil

Carlos R. Azzoni, Aquiles Kalatzis

Azzoni, Carlos Roberto, and Aquiles Kalatzis. "Regional Differences in the Determinants of Investment Decisions of Private Firms in Brazil." Paper presented at the 46th Congress of the European Regional Science Association, Volos 2006.

Abstract: This study takes on an important part or regional growth, that is, the investment decisions of private firms. The question asked is: do corporations decide on investments in the same way in different parts of the territory? The paper analyses investments of 373 large Brazilian firms in the period 1996-2004. The role of sales, cash-flow, external financing, and working capital is investigated through regression analysis, following the literature on firm investment decisions. Regional dummies used to capture differences in the role of those determinants indicate that there are significant differences across regions. This is important information for regional development policy, for different mechanisms should be used in different regions in order to foster private investments.