Relative Effects of Public and Private Investment on Cote d'Ivoire's Economic Performance
8 Pages Posted: 24 Aug 2008
Date Written: August 23, 2008
This paper investigates the impact of public and private investment on Cote d'Ivoire's economic performance (GDP growth) over the period 1969-2001, using an autoregressive-distributed lag (ARDL) Error Correction Model (ECM). The results shows that in the short run an increase in private investment by 1% enhance economic growth by 28%, while a 1% increase in public investment leads to only 7% increase in real GDP. In the long run nevertheless the impact of public investment on GDP growth has been higher than private investment, a 1% increase in private investment leads to 25% increase in GDP, while public investment impacts growth by 37%. On the other hand, a 1% increase in employment leads to 38% increase in long run GDP growth. The main findings indicate that while the short run efficiency of public capital can be further improved in Cote d'Ivoire, in the same time the efficiency of private investment can be improved in the long run.
Keywords: Public and Private Investment, GDP growth, ECM, Error Correction Model, Cote d'Ivoire
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By Bedia F. Aka