Profitability and Investment: Evidence from India's Organized Manufacturing Sector

• DOI: 10.1111/meca.12126
• Publication Date: 2016-04-13T12:33:34Z
• Authors: Deepankar Basu; Debarshi Das
• Keywords: Profit rate; Capacity utilization; Investment; Rate of profit; Gross profit; Capital investment

Abstract Using a state‐industry panel data set of 55 industries for 19 major Indian states over the period 1983–84 to 2007–08, we analyze contemporaneous and long run impacts rate profit its components—profit share, capacity utilization capacity‐capital ratio—on investment using linear dynamic models. Our results show that: (a) has both short positive on investment; (b) share ratio have mainly impacts, but more complex pattern impact investment.