Private and public investment in sub-Saharan Africa: The role of instability risks
Relwendé Sawadogo () and
Economic Systems, 2020, vol. 44, issue 2
This paper explores the impact of public investment on private investment in sub-Saharan Africa using the finite mixture model. We argue that the impact of public investment on private investment differs across groups of countries with similar but unobserved characteristics. Contrary to previous studies, the paper incorporates the potential presence of hidden heterogeneity and tries to explain the group membership. Using a sample of 42 countries, we find that the impact of public investment on private investment differs across three different groups of countries. Moreover, we find that countries with high risk of conflict, terrorism and repatriation of profits are less likely to be in the group where public investment crowds in private investment. The paper underscores the need for sub-Saharan African countries to ensure private investment security by reducing the risks associated with conflicts and terrorism, and preserving contract viability and repatriation of profits.
Keywords: Sub-Saharan Africa; Private investment; Public investment; Finite mixture model (search for similar items in EconPapers)
JEL-codes: E22 E62 H41 O16 (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
Full text for ScienceDirect subscribers only
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:eee:ecosys:v:44:y:2020:i:2:s0939362518304047
Access Statistics for this article
Economic Systems is currently edited by R. Frensch
More articles in Economic Systems from Elsevier Contact information at EDIRC.
Bibliographic data for series maintained by Haili He ().