Investment Plans and Realizations in United Kingdom Manufacturing

Abstract

Since 1955 the Board of Trade has collected annual data on the investment intentions for the following year of private manufacturing firms in the United Kingdom; and it has recently made these statistics generally available.2 This paper investigates the determinants of these investment intentions in the manufacturing sector and evaluates their usefulness in forecasting actual investment compared with that of techniques not using anticipatory data.3 The plan of the paper is as follows. Section I describes the data and notation used in the paper and considers the problems of deflating the anticipatory series. The determinants of investment intentions are analysed in Section II. Section III adopts a realization-function approach to examine factors underlying unfulfilled investment plans. The usefulness of anticipatory data in forecasting actual investment compared with that of investment functions not involving the intentions data is examined in Section IV. Section V presents the paper's conclusions.