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Public and Private Investment and Economic Growth in Zambia: A Dynamic Approach

Author

Listed:
  • MAKUYANA, Garikai

    (Department of Economics, University of South Africa, Pretoria, South Africa)

  • ODHIAMBO, Nicholas M.

    (Department of Economics, University of South Africa, Pretoria, South Africa)

Abstract

This paper investigated the dynamic contributions of public and private investment to economic growth in Zambia during the 1970 to 2014 period. In the analysis, the paper also estimated the important indirect contribution of public investment to economic growth through its crowding effect on private investment. The study employed the autoregressive distributed lag (ARDL) model in estimating the economic growth and private investment models. The empirical evidence from the study shows that private investment contributes more to economic growth than public investment in Zambia in the short run and long run. In addition, gross public investment, infrastructural and non-infrastructural public investment are found to crowd out private investment in the short run; while non-infrastructural public investment had a long run crowding out effect on private investment. The results imply that the long-run contributions of both private and public investment to economic growth in Zambia can be improved by raising the infrastructural public investment. Investimenti pubblici e privati e crescita economica nello Zambia: un approccio dinamico Questo studio analizza il contributo dinamico degli investimenti pubblici e privati alla crescita economica nello Zambia dal 1970 al 2014. In questa analisi è incluso anche l’importante contributo che gli investimenti pubblici portano alla crescita attraendo gli investimenti privati. Lo studio utilizza il modello ARDL (autoregressive distributed lag) per la valutazione della crescita economica e degli investimenti privati. Vi sono evidenze empiriche che gli investimenti privati contribuiscono più di quelli pubblici alla crescita economica nello Zambia, sia nel breve che nel lungo periodo. Inoltre importanti investimenti pubblici, infrastrutturali e non, risultano avere un effetto spiazzamento sugli investimenti privati nel lungo periodo. I risultati della ricerca implicano che i contributi degli investimenti sia privati che pubblici alla crescita economica nello Zambia possono essere migliorati aumentando gli investimenti pubblici nelle infrastrutture.

Suggested Citation

  • MAKUYANA, Garikai & ODHIAMBO, Nicholas M., 2018. "Public and Private Investment and Economic Growth in Zambia: A Dynamic Approach," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 71(4), pages 503-526.
    • Handle: RePEc:ris:ecoint:0837
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    Cited by:

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    2. Sofia São Marcos & Sofia Vale, 2024. "Is there a nonlinear relationship between public investment and private investment? Evidence from 21 Organization for Economic Cooperation and Development countries," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 29(1), pages 887-902, January.
    3. Saungweme, Talknice & Odhiambo, Nicholas M, 2019. "Relative impact of domestic and foreign public debt on economic growth in South Africa," Working Papers 25664, University of South Africa, Department of Economics.
    4. Victor Yotzov, 2020. "Foreign Direct Investments and Economic Growth in Bulgaria: Theoretical Challenges and Empirical Results," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 4, pages 3-27.
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    6. Hughes Hallett, Andrew & Hougaard Jensen, Svend E. & Sveinsson, Thorsteinn Sigurdur & Vieira, Filipe, 2019. "Sustainable fiscal strategies under changing demographics," European Journal of Political Economy, Elsevier, vol. 57(C), pages 34-52.
    7. Nyoni, Thabani, 2018. "What determines private investment in Burundi?," MPRA Paper 87614, University Library of Munich, Germany.
    8. Gerda Dewit & Dermot Leahy, 2018. "Attracting Foreign Direct Investment in Infrastructure," Economics Department Working Paper Series n290-18.pdf, Department of Economics, National University of Ireland - Maynooth.
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    More about this item

    Keywords

    Zambia; Public Investment; Private Investment; Economic Growth; Crowding in Effect; Crowding out Effect; ARDL Model;
    All these keywords.

    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • P12 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Capitalist Enterprises

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