Macroeconomic Determinants Of Private Investment In Namibia

An econometric analysis of the cleteyminants of private investmentrnwi th the aid of the Engle and Granger (2987) Tr,.,-o-s tel? IHocedurernsuggest that in the long-run private investment is affectedrnpositively by public investment, real gross domestic productrn(real output), credit to the private sector, depreciation of thernexchange rate and negatively by an increase in the inflation andrnreal interest rate.rnIn the short-run an increase in public investment and real grossrndomestic product (real output) stimulates private investment inrnNamibia. However, increases in inflation and real interest ratesrnas well as depreciation of the exchange rate were found torninhibit private investment in the short run.rnThe central policy recommendation of this study is that thernmaintenance of a stable macroeconomic environment is crucial tornefforts aimed at encouraging private investment and thus towardrnlaying the foundation for sustained economic growth in Namibia.rnThese will be derived from a low and stable inflation rate,rnstable and predictable exchange rate, reduction in unemploymentrnlevels brought about by increased private sector participationrnin the productive sector of the economy, and by limi ting the rolernof the public sector to the provision of essential services thatrndo not compete with the private sector for scarce credit.

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