Private Investment and Economic Growth in South Africa: A Multivariate Causality Approach

Series Economics and Business Issues Volume 12, 2024 Private Investment and Economic Growth in South Africa: A Multivariate Causality Approach

Volume 12, 2024

Glenda MALULEKE

Acta Univ. Sapientiae, Economics and Business, 12 (2024) 160–173

DOI: 10.47745/auseb-2024-0008

Abstract. This study examines the causal relationship between private investment and economic growth in South Africa using the autoregressive distributed lag (ARDL) bound test for cointegration and data from 1980 to 2022.The study incorporated other macroeconomic determinants of private investment in the model, such as public investment and financial development, to create a multivariate Granger causality model.The results indicate that in the long and short run there is bidirectional causality between private investment and economic growth.It is also found that there is unidirectional causality from public investment to private investment in the long run.However, there is bidirectional causality between public investment to private investment, while there is unidirectional causality from private investment to financial development in the short run.Based on these results, the study concludes that economic growth and public investment promote private investment in South Africa.

Keywords: public investment, financial development, multivariate Granger causality, South Africa

JEL Classification: E22, O16, O47

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Volume 12, 2024

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Private Investment and Economic Growth in South Africa: A Multivariate Causality Approach - Acta Universitatis Sapientiae