Effects Of Depreciation Policies Of Basic Industry On Investment Behavior Regions And Enterprises

From the international experience, most of the developed countries have used thedepreciation policy to promote industrial development, but China has not yet taken fulladvantage of this. China is in the critical period of the transformation of economicdevelopment, research of the role of depreciation policy in promoting industrialdevelopment and regional coordination has important significance.Thearticleintroduced the depreciation rate to the neoclassical investment model,madetheoretical analysis of the effects of depreciation policy on investment demand fromthree aspects,and then took the basic industry as the reaserch object to examine theimpact of the accelerated depreciation method on investment,from regional andenterprise level respectively.The regional level results show that the increase of the depreciation rate in basicindustry sector does promote investment, and the marginal effect diminishes;government intervention in investment activities increases the sensitivity of investmentto depreciation rate. Further research found that the impact of depreciation rate is akind of regional different: lowest in the Eastern, the next the Central, and highest in theWestern. The conclusion is defined that the government can give a certain degree of tiltto the depreciation policy of the central and western regions,so that they can adopt theaccelerated depreciation method to promote the development of basic industries.Enterprise-level test results also showed that there is a positive correlation betweendepreciation rate and fixed assets investment,and marginal effectdiminishes.To accountfor the differences between industries,the article took the proportion of self-financingin the investment fund as a index to measure the financial constraints sectorsuffered,after introducing the index to the model,we found that differences in financialconstraints between sectors led to different sensitivity of investment todepreciationrate,specifically,sector suffered the greater financing constraints, the lower thesensitivity of investment to depreciation rate.Furtherthe articleseparatedthe samplecompanies into different groups in accordance with the ownership,grouping regressionresults showedthat SOE’s sensitivity of fixed assets investment to depreciation rate ishigher than the non-state-owned enterprises.These findings are defined thatdepreciation schedules the government formulatedshould consider the differencesbetween sectors.