Public and Private Investment and Economic Growth in Namibia (1970-2005)

Abstract

Using the framework of an endogenous growth model, this study analyzes the impact of public and private investment on economic growth in Namibia over the 1970–2005 periods. Cointegration and error correction modeling approaches were adopted. The results suggest that in addition to public and private investment,-exports, imports, economic freedom, labour and human capital significantly and positively impact on short and long-term economic growth. In contrast, terms of trade and real exchange rate, are found to have a negative effect on short and long-term economic growth. The short-term dynamic behaviour of this relationship was investigated by estimating an error correction model. The error correction term was found to be statistically significant and with correct sign.