Public Expenditure and Private Sector Investment in WAEMU Countries

Mawussé Okey

Working Papers from African Economic Research Consortium

Abstract: This paper seeks to analyse the nature of the relationship between public expenditure and private investment in eight WAEMU countries for the period 1980a-2009. Our analysis, using econometric estimations, shows that total public expenditure and its capital component positively and significantly affect private investment. The results also highlight a non-linear quadratic relationship between public spending and private investment. Public spending and its capital component (share of GDP) should be at least 20% and 8.79%, respectively, before having a significant positive effect on private investment. Governments and policy makers should pursue the vast infrastructure policies undertaken these last years in the WAEMU zone and mobilize more resources to finance capital expenditures.

Date: 2016-10-03
Note: African Economic Research Consortium
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