The Flexible Accelerator Model of Investment: An Application to Ugandan Tea- Processing Firms

The study uses the flexible accelerator model to examine determinants of the level and growth of investment in machinery and equipment for a sample of tea-processing firms in Uganda. Using a dynamic panel data model, we find that, in the long run, the level of investment in machinery and equipment is positively influenced by the accelerator, firm-level liquidity, and a favourable investment climate in the country. Depreciation of the exchange rate negatively affects investment. We conclude that firm-level strategies that increase output and profitability, and a favourable investment policy climate, are imperative to the growth of the tea industry

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Journal Article
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Volume 10, Number 1
African Journal of Agricultural and Resource Economics
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 Record created 2017-04-01, last modified 2018-01-23

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