Public and private investment and economic growth in Zimbabwe: An empirical test

Abstract

This study performs an examination on the impact of public and private investment on economic growth and the crowding effect of public investment on private investment in Zimbabwe from 1970 to 2014. The study utilised the newly developed autoregressive distributed lag-bounds testing approach with better small sample properties than the traditional cointegration techniques. The results show that public investment has a higher short-run growth impact, but in the long run the private investment-led growth is more important. In addition, while gross public investment crowds out private investment, infrastructural public investment has a long-run crowding in effect. A non-infrastructural public investment was also reported to have a short-run crowding out effect on private investment. The results suggest that the productivity of public and private investment in Zimbabwe can be improved by cutting back on non-infrastructural public investment to basic minimum level while stimulating the growth in infrastructural public investment.

Economic and Tourism Factors Affecting the Real Gross Regional Domestic Product: A Case Study

“…The results of the study support the findings of Makuyana and Odhiambo (2017) who conducted research in Zimbabwe during the period 1970-2014, using the recently developed autoregressive distributed lag model (ARDL) bounds testing approach. They divide domestic investment into two categories, namely public investment and private investment.…”

“…The study by Makuyana and Odhiambo (2017) in Zimbabwe from 1970 to 2014, using the recently developed autoregressive distributed lag model (ARDL) bounds testing approach, reveals that domestic investment has a positive effect on real GDP growth. However, according to them, investment from public sectors has a greater impact on economic growth in short-run.…”

An empirical analysis on the impact of non-performing loans on investment and economic growth and the role of political governance

“…Epaphra and Massawe (24) claimed that domestic private investment and FDI have a positive impact on growth in Tanzania. Makuyana and Odhiambo (25) concluded that public and private investments played a major role in economic growth in both developed and developing countries. A close connection between the level of investment and rate of economic growth has also been established in other studies in order to bolster the investment-growth theory (26)(27)(28)(29) .…”

Sustainable fiscal strategies under changing demographics

“…We consider here aggregate private capital to be as in Arrow's (1962) Learning by Doing model. For a literature review on the importance of both private and public investment in the economic growth process, see Makuyana and Odhiambo (2016).…”