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Does Domestic Investment Contribute to Economic Growth in Uruguay? What did the Empirical Facts Say?

Sayef Bakari (), Sofien Tiba and Nissar Fakraoui

MPRA Paper from University Library of Munich, Germany

Abstract: The fundamental role of domestic investment to provide economic prosperity is very well recognized by the economic theory since the Mercantilist theory. Hence, we investigate the impact of domestic investment on economic growth for the case of the Uruguayan economy over the period 1960-2017. For this aim, we employ the Vector Error Correction Model (VECM). Our highlights reveal the absence of a significant impact of domestic investment on growth in the short- and long-run. Due to the marginal role of domestic investment played in the Uruguayan economy, the weak saving rate couldn’t significantly help the economy and creating wealth. Therefore, a strong saving policy is required to encourage domestic investors and reevaluate their crucial role in the economic process of Uruguay.

Keywords: Domestic investment; Economic growth; VECM; Uruguay. (search for similar items in EconPapers)
JEL-codes: E2 E22 E23 O4 O40 O47 O54 (search for similar items in EconPapers)
Date: 2019-08
New Economics Papers: this item is included in nep-fdg, nep-his and nep-mac
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