Economics at your fingertips  

Public and Private Investment and Economic Growth: An Empirical Investigation

Makuyana Garikai () and Nicholas Odhiambo ()
Additional contact information
Makuyana Garikai: University of South Africa, South Africa

Studia Universitatis Babeș-Bolyai Oeconomica, 2018, vol. 63, issue 2, 87-106

Abstract: This paper provides new evidence to contribute to the current debate on the relative impact of public and private investment on economic growth and the crowding effect between the two components of investment in South Africa. Using annual data from 1970 to 2017, the study applies the recently developed Autoregressive Distributed Lag (ARDL)-bounds testing approach to cointegration. The study finds that private investment has a positive impact on economic growth both in the long run and short run, while public investment has a negative effect on economic growth in the long run. Further, in the long run, gross public investment is found to crowd out private investment, while its infrastructural component is found to crowd in private investment. The results of the study also reveal that both gross public investment and non-infrastructural public investment crowd out private investment in the short run. Overall, the study finds private investment to be more important than public investment in the South African economic growth process and that the importance of infrastructural public investment in stimulating private investment in the long run cannot be over-emphasized.

Keywords: South Africa; Public Investment; Private Investment; Economic Growth; Crowding Effect (search for similar items in EconPapers)
JEL-codes: E22 O47 P12 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2) Track citations by RSS feed

Downloads: (external link) ... -0010.xml?format=INT (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Access Statistics for this article

Studia Universitatis Babeș-Bolyai Oeconomica is currently edited by Dumitru Matis

More articles in Studia Universitatis Babeș-Bolyai Oeconomica from Sciendo
Bibliographic data for series maintained by Peter Golla ().

Page updated 2020-07-06
Handle: RePEc:vrs:subboe:v:63:y:2018:i:2:p:87-106:n:5