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Interaction of public and private investment in Southern Africa: a dynamic panel analysis


  • Thomas Chataghalala Munthali


While the debate on the crowding-in-out effects of public investment on private investment largely seems to point towards a crowding-in effect in developing economies and the opposite in advanced economies, considerable evidence exists on the inconclusiveness of such findings across countries and regions. This study uses two investment models, Koyck’s flexible accelerator and Jorgenson’s neoclassical with error correction modified to empirically capture the structural and institutional characteristics of the Southern African region, to investigate crowding-in effects in one of the world’s most underdeveloped regions, Southern Africa. The study’s models reject the existence of crowding-in effects even when the public investment component of transport and communication is used. However, the study unveils macroeconomic uncertainty, market size, and capital availability as binding constraints on private investment in Southern Africa.

Suggested Citation

  • Thomas Chataghalala Munthali, 2012. "Interaction of public and private investment in Southern Africa: a dynamic panel analysis," International Review of Applied Economics, Taylor & Francis Journals, vol. 26(5), pages 597-622, September.
  • Handle: RePEc:taf:irapec:v:26:y:2012:i:5:p:597-622
    DOI: 10.1080/02692171.2011.624500

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    References listed on IDEAS

    1. James Gwartney, 2004. "What Have We Learned from the Economic Freedom of the World Index?," Journal of Private Enterprise, The Association of Private Enterprise Education, vol. 20(Fall 2004), pages 1-8.
    2. Khan, Mohsin S. & Reinhart, Carmen M., 1990. "Private investment and economic growth in developing countries," World Development, Elsevier, vol. 18(1), pages 19-27, January.
    3. Marc Lavoie, 1992. "Foundations of Post-Keynesian Economic Analysis," Books, Edward Elgar Publishing, number 275.
    4. Marianna Belloc & Pietro Vertova, 2004. "How Does Public Investment Affect Economic Growth in HIPC? An Empirical Assessment," Department of Economics University of Siena 416, Department of Economics, University of Siena.
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