THE CONTRIBUTION OF PRIVATE INVESTMENT TO ECONOMIC GROWTH AND DEVELOPMENT IN SOUTH AFRICA

Abstract

Despite numerous studies highlighting the importance of investment in Africa, there is a shortage of research on the influence of private investment on economic growth in South Africa. This is the void that this piece of writing filled. As a result, this article will concentrate on the importance of private investment in South Africa’s economic growth between 1975 and 2019. The research utilised the Cob-Douglas model framework. The model was estimated using the Vector Error Correction Model (VECM) and the Johansen co-integration technique. The South African Reserve Bank (SARB) and World Development Indicators provided data for this study (WDI). The analyses found that all macroeconomic variables have an equilibrium long run connection. The investigation revealed that the only statistically important variables in the long term are private consumption, the exchange rate, inflation, and trade openness. However, all private and public investment factors have long-run statistical significance concerning GDP. As a result, policy-makers should work to increase credit availability to investors in the South African economy while bolstering investor confidence.