An empirical analysis of sector-wise private investment for a small open economy

Abbas, Ahsan; Abbas, Zaheer; Mustifa, Ghulam

doi:10.1080/21665095.2022.2032235

Cited by 2 publications

(1 citation statement)

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“…Although several studies have been conducted on the determinants of investment in developing and developed countries, see Abbas et al (2022); Awad et al (2021), it has not been adequately covered in South Africa. Very few studies have fully explored the key drivers of private investment in South Africa.…”

Section: Introductionmentioning

confidence: 99%

The determinants of private investment: Evidence from South Africa

Maluleke

2024

Econ. J. Emerg. Mark.

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Purpose ─ This paper examines the determinants of private investment. The result can help the government determine which investment drivers to consider when formulating policies to stimulate private investment.Methodology ─ It uses a Nonlinear Autoregressive Distributed Lag (NARDL) estimation approach with time series data from 1965 to 2022. Findings ─ The results indicate that positive shocks in economic growth lead to an increase in private investment over the long term. Conversely, both positive and negative shocks in inflation are found to positively impact private investment in the long run. Additionally, domestic credit to the private sector has a negative impact in both the short and long term. Implications ─ The government should develop policies designed to create an environment conducive to private investment. These policies should focus on ensuring easy access to finance, enhancing the openness of the economy, and maintaining a low and stable inflation rate.Originality ─ Few studies have fully explored the important drivers of private investment, especially in South Africa. Moreover, the studies conducted in South Africa have used other cointegration techniques, which are relatively weak compared to the NARDL used in the current study.

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Section: Introductionmentioning

confidence: 99%