Private Investment and Economic Growth: Evidence from Ethiopia.
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Date
2007-07
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A.A.U
Abstract
The paper investigates the relationship between private investment, economic
growth and Public investment in a neoclassical growth framework over the
period 1971-2006. To account for the problem of endogeneity and non stationarity,
it employs co integrated vector auto regressive model. Results
suggest that both private and public investment contributed positively to
economic growth in Ethiopia for the period under study. The impact of private
investment on real growth has been greater than that of the public sector
investment. Public sector investment also has complimentary with private
capital formation, implying that crowding in impact of public investment on the
private investment. Such a crowding in effect for a country like Ethiopia where
the private investment is at its low development stage is essential to improve
its productivity and enhances economic growth
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Keywords
Private Investment, Evidence from Ethiopia