Fixed capital adjustment: Is Latin America different?

We examine capital adjustment patterns using two large and largely novel pl ant-level data sets from the manufacturing sectors of Colombia and Mexico. The data suggest that irreversibilities play a more important role than in more-advanced economies. However, we do not find support for the presence o f increasing returns in the adjustment cost technology, such as arising fro m fixed costs. Firms go through. periods of inaction and rarely sell capita l, but they do not invest at discrete times only, Am examination of the dyn amic patterns of adjustment of factors differing in their flexibility suppo rts this interpretation.