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Corresponding Author:
Garikai Makuyana, Department of Economics, University of South Africa, Pretoria, South Africa

Coauthors:
Nicholas M. Odhiambo, Department of Economics, University of South Africa, Pretoria, South Africa

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

Volume 71 - Issue 4, November 2018
(pp. 503-526)
JEL classification: E22, O47, P12
Keywords: Zambia, Public Investment, Private Investment, Economic Growth, Crowding in Effect, Crowding out Effect, ARDL Model

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.


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