This thesis investigates the direction and magnitude of the linkages betweenrnprivate investment and public investment, as well as their relative impact onrneconomic growth in Ethiopia. To that end, an error correction model employedrnon a time series data for the study period ranging from 1970/ 71 -2004/05.rnThe study reveals that both private and public investment has stimulatedrneconomic growth in Ethiopia. In addition to that, the impact of privaterninvestment on economic growth has been found to be more pronounced thanrnpublic investment in the long run while public investment shows a morernpronounced impact in the short run. With respect to the relationship betweenrnpublic and private investment, Public investment is found to deleteriouslyrnimpacted private investment in the short run while in the long run it hasrninsignificant impact, implying that the crowding-out impact of publicrninvestment have been large enough to offset any crowding-in effects in thernshort run. Moreover the study shows the significant and positive impact ofrnoutput growth in stimulating private investment. The paper thus concludesrnthat the long run impact of private investment is higher than public investment,rnand involvement of public capita in sectors far from being an infrastructuralrnnature may jeopardize favorable effects of public sector infrastructuralrninvestment on private sector. The result implies that government needs torncreate more room for private sector participation.