| dc.description.abstract | Despite several studies on the significance of investment in Africa, there is still a dearth of studies on the impact of private investment on economic growth in South Africa as a country. This is the vacuum that this research fills in order to provide policy-makers with advice on how to improve private investment's contribution to growth in South Africa. As a result, the first part of the research focuses on the role of private investment in South Africa's economic growth. It also attempts to assess the factors that influenced private investment in South Africa's economic growth from 1975 to 2019, which include public investment, private consumption, trade openness, inflation rate, exchange rate, and domestic credit to the private sector.
The Cob-Douglas model framework was used in the research. To estimate the model, Vector Error Correction Model (VECM), Johansen co-integration, and OLS regression techniques were used to estimate the model. The study also demonstrated the importance of private investment in South Africa's economic growth. The South African Reserve Bank (SARB) and World Development Indicators (WDI) provided data for this study. The investigations' findings revealed a long-run equilibrium relationship between all macroeconomic variables. The study established that private consumption, exchange rate, inflation rate, and trade openness were the only positive statistically significant variables in the long run. However, all the variables, inclusive of private investment and public investment, exhibited long-run joint positive statistical significance with respect to GDP. The impulse response results revealed that all the variables responded positively to shock.
However, the analysis found that a period lag of GDP stimulated GDP in the current period. In addition, domestic credit to the private sector generated a negative impact on GDP in the long run, which contradicts expectations because the availability of credit is supposed to increase investment
levels as well as improve investors’ behaviour. Therefore, policy-makers should ensure the improvement of credit availability to investors in the South African economy as well as enhance investors’ confidence. Moreover, it is necessary to emphasize the possible future policy framework and the need to improve the investment climate. There is a need for structural reform programmes to be designed by policy-makers to encourage exports and reduce imports. Moreover, policy-makers must stimulate economic partnership for proper productivity. In addition, private investment can be improved through the maintenance of macroeconomic and fiscal stability measures, which constitute a significant precondition for the success of any policy related to domestic private investment. In addition, public investment should be seen as an avenue for complementing private investment because private investment would contribute more to GDP than foreign investment.
Key | en_US |
