Private Investment And Economic Growth Evidence From Ethiopia.

The paper investigates the relationship between private investment, economicrngrowth and Public investment in a neoclassical growth framework over thernperiod 1971-2006. To account for the problem of endogeneity and non stationarity,rnit employs co integrated vector auto regressive model. Resultsrnsuggest that both private and public investment contributed positively torneconomic growth in Ethiopia for the period under study. The impact of privaterninvestment on real growth has been greater than that of the public sectorrninvestment. Public sector investment also has complimentary with privaterncapital formation, implying that crowding in impact of public investment on thernprivate investment. Such a crowding in effect for a country like Ethiopia wherernthe private investment is at its low development stage is essential to improvernits productivity and enhances economic growth

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