From Replacement to Capacity Expansion

Replacement, modernization or capacity expansion are frequently used as concepts allowing to characterize alternatives parts of the firms’ investment spending. But such a typology seems to be poorly tractable for an empirical analysis of investment behaviour. This paper aims at showing that some determinants of investment spending can be more richly understood by differentiating firms’ expenditure by motives. We use original data extracted from the insee’s business survey on investment in the industry over the nineties, which allows us to focus on the firms’ investment decision. The different determinants are then shown to have asymmetric impacts, depending on the strategic motives characterizing the investment spending.