<abstract xmlns="http://www.w3.org/1999/xhtml"><p>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.</p></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.

Public and Private Investment and Economic Growth: An Empirical Investigation

Studia Universitatis Babes-Bolyai Oeconomica

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 License.

{"article-title":"Public and Private Investment and Economic Growth: An Empirical Investigation"}

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...

Public and Private Investment and Economic Growth: An Empirical Investigation

Published Online: Dec 01, 2018

Page range: 87 - 106

DOI: https://doi.org/10.2478/subboec-2018-0010

Keywords
South Africa, Public Investment, Private Investment, Economic Growth, Crowding Effect

© 2018 Garikai Makuyana et al., published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 License.

Public and Private Investment and Economic Growth: An Empirical Investigation

Published Online: Dec 01, 2018

Page range: 87 - 106

DOI: https://doi.org/10.2478/subboec-2018-0010

KeywordsSouth Africa, Public Investment, Private Investment, Economic Growth, Crowding Effect

© 2018 Garikai Makuyana et al., published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 License.

Keywords
South Africa, Public Investment, Private Investment, Economic Growth, Crowding Effect