Just-in-Case Inventories : A Cross-Country Analysis
The authors find that raw materials inventories in the manufacturing sector in the 1970s and 1980s were two to three times higher in developing countries than in the United States, despite the fact that in most developing countries real interest ra...
| Main Authors: | , |
|---|---|
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2014
|
| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2003/04/2191897/just-in-case-inventories-cross-country-analysis http://hdl.handle.net/10986/18262 |
| Summary: | The authors find that raw materials
inventories in the manufacturing sector in the 1970s and
1980s were two to three times higher in developing countries
than in the United States, despite the fact that in most
developing countries real interest rates were at least twice
as high. Those significantly high levels of inventories are
a burden and an obstacle to country competitiveness and need
to be addressed. Poor infrastructure and ineffective
regulation, as well as deficiencies in market development,
rather than the traditional factors used in inventory models
(such as interest rates and uncertainty), are the main
determinants and explain these differences. Cross-country
estimations show that a one standard deviation worsening of
infrastructure increases raw materials inventories by 11
percent to 37 percent, and a one standard deviation
worsening of markets increases raw materials inventories by
18 percent to 37 percent. These findings are robust across a
number of different proxies and specifications, including an
industry-level specification that controls for fixed country effects. |
|---|