Abstract:
Private investment stimulates growth in any economy, and increasing it is one of the
prerequisites for achieving a sustainable economic growth, hence, private investment is
another source of employment, in addition to positively contributing to national economic
output. Countries which can accumulate high levels of investment achieve faster rates of
economic growth and development. Motivated by concerns on the persistent decline in
private investment, the purpose of this study is to investigate effects of private investment
on economic growth in South Africa using time series data for the period 1982 - 2019. A
total of 37 observation of economic growth, inflation rate, public investment, credit to
private sector, real exchange rate, Human capital, Labour force, Private investment and
interest rate were be used in this study. Multiple regression and co-integration methods
were employed to analyse the data. To avoid spurious regression results on time series
data, the first step was to test for the stationarity of the data by using Augmented Dickey-
Fuller. The study used Johansen co-integration technique to establish if the nonstationary
variables are co-integrated. The study concludes that private and public
investment are positively correlated with economic growth in the short and long run in
South Africa. The study informs policymakers and stakeholders, including the
government, municipal authorities and employers in the private and public sectors in
relation to formulation of possible policy intervention to help stimulate and sustain private
investment and therefore economic growth.
