Impact of public and private investment on economic growth in Kenya
Abstract
As countries strive to develop, increasing their level of output remains a major concern. Contributions of private and public investment are important in realizing this. It is argued that private investment is an important strategy of achieving economic growth through its ability to stimulate economic activities by expanding the capacity for production of goods and services. On the contrary, contribution of public investment has received mixed arguments. The study sought
to shed light on the contribution of both private and public investment, and other factors namely; labour force-proxied by population, government expenditure, inflation, foreign direct investment, openness to trade and foreign aid on economic growth.
The study utilized time series data from various editions of Economic Survey from the period 1970 to 2011. The data was tested for time series properties and then OLS regression analysis was carried out. The findings indicated that private and public investment, foreign direct investment, and openness to trade are significant and positively contribute to growth in output. However, labour force as proxied by population has a negative significant contribution. In addition, government expenditure, inflation and foreign aid were found to be insignificant. Based on the findings, the study advocates for efficient policies geared towards increasing private and public investment, openness to trade, and those aimed at controlling population growth.
Publisher
University of Nairobi, Kenya