Uncertainty and Investment Behaviour in the Democratic Republic of Congo

Xavier Bitemo Ndiwulu

Working Papers from African Economic Research Consortium

Abstract: The aim of this study was to assess the impact of uncertainty on private investment in the Democratic Republic of Congo (DRC). We conducted an econometric analysis based on a flexible accelerator model of investment spending. The results showed that both macroeconomic uncertainty, as measured by the conditional variance of inflation, and political uncertainty had a negative impact on investment rates. The two main policy implications of these results are: First, stabilization policies, and especially their credibility, are essential to promote private investment in DRC; and second, the government should adopt policies which help to reduce the risk of reverting to conflict.

Date: 2011-01
Note: African Economic Research Consortium
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