 Public infrastructure investment and private investment in East African community: crowding-in or crowding-out?James Ochieng Babu, Daniel Abala and Mary Mbithi International Journal of Sustainable Economy, 2022, vol. 14, issue 1, 1-23 Abstract: The study investigates the link between public infrastructure investment and private investment for five East African community partner states using data for the period 1990-2019. Pooled mean group estimator was employed to capture short- and long-run dynamics. The results indicate that in the short-run, public infrastructure investment crowds-out private investment, however in the long-run, there is crowding-in effect. The findings also confirm the accelerator theory of investment, that is, a positive relationship between private investment and real income. We perform a sensitivity analysis by re-estimating the model using a shorter sub-sample, in the pre-Global Financial Crisis period (1990-2006). Our results are generally robust to this specification. Therefore, to boost private investment in East African community, it is necessary to channel additional resources towards infrastructure development. A stable macroeconomic environment is also a key for private sector investment in the region. Keywords: public infrastructure investment; crowding in; crowding out; private investment; pooled mean group; PMG; East African community; EAC. (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:ids:ijsuse:v:14:y:2022:i:1:p:1-23 Access Statistics for this article More articles in International Journal of Sustainable Economy from Inderscience Enterprises Ltd |
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