Determining Factors of Private Investment: Empirical Study of Pakistan

Developing Country Studies, Vol. 4, No. 25, 2014

18 Pages Posted: 4 Jan 2015

See all articles by Atif Salman

Atif Salman

Shaheed Zulfikar Ali Bhutto Institute of Science and Technology (SZABIST)

Nawaz Ahmad

RTS (Research, Trainings, and Solutions); Mehran University of Engineering & Technology

Date Written: December 30, 2014

Abstract

There is an ample amount of work on private investment for the cases of both developed and developing economies. Blejer and Khan (1984) study the investment function for developing countries using pooled data of 24 countries for the period 1971-1979. They find credit availability and infrastructural public investments are positively related to private investment. They observe that crowding-out phenomena works in case of noninfrastructural investment. As quoted by Saker (1993), behavior of private investment is quite different in developed and developing economies. Credit availability and government investment appear to be strong boosters of private investment in case of developing economies. Utilizing the Pakistani data set from FY 1974 to FY 1992, Saker (1993) concludes that private investment is positively correlated with output growth, private sector credit availability and government infrastructural investment. Oshikoya (1994) models private investment function for various middle-income and low-income African countries for the period 1971-1988. He finds that real output growth, real exchange rate, credit availability and government infrastructural investment are positively related to domestic private investment in studied African countries. Inflation and external debt servicing add to macroeconomic uncertainty and are, therefore negatively related to private investment.

Keywords: Private Investment, Pakistan

JEL Classification: C12, C22, D92, E62, R42

Suggested Citation

Salman, Atif and Ahmad, Nawaz, Determining Factors of Private Investment: Empirical Study of Pakistan (December 30, 2014). Developing Country Studies, Vol. 4, No. 25, 2014, Available at SSRN: https://ssrn.com/abstract=2544862

Atif Salman

Shaheed Zulfikar Ali Bhutto Institute of Science and Technology (SZABIST) ( email )

90 and 100 Clifton
Karachi, ISLAMABAD 75600
Pakistan

Nawaz Ahmad (Contact Author)

RTS (Research, Trainings, and Solutions) ( email )

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9th Nishat Lane, DHA 6
Karachi, Sindh 75500
Pakistan
00923009292422 (Phone)

Mehran University of Engineering & Technology ( email )

Jamshoro, 76062
Pakistan
+923009292422 (Phone)

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