Open AccessThe Combined Effects of Public and Private Investments on Economic Growth in the CEMAC Zone
Author(s) -
Noula Armand Gilbert,
Chouafi Nguekam Orfé,
François Kamajou
Publication year - 2019
Publication title -
journal of economic science research
Language(s) - English
Resource type - Journals
ISSN - 2630-5240
DOI - 10.30564/jesr.v3i1.1066
Subject(s) - economics , causality (physics) , general partnership , private sector , error correction model , estimation , panel data , sustainable growth rate , macroeconomics , econometrics , cointegration , economic growth , finance , physics , management , quantum mechanics
This study evaluates the simultaneous impact of public and private investments on economic growth in the CEMAC zone between 1984 and 2017.To attain this aim, we use the Vector Error Correction Model (VECM) to test the direction of causality between the three variables above at the level of each country. We find that the direction of causality is not the same in all the countries both in the short as in long-run. We then develop an ideal model going from the Cobb Douglas production function which we quantitatively validate using panel data estimation through the method of Pool Mean Group which takes into account individual specificities. It arises that contrary to economic theory, private sector investments have positive and significant effects in short-run. However, the impact of public investments is negative and significant. In the long-run, the effects are reversed and call on the authorities of the CEMAC zone to reinforce the political risk to strengthen the public-private partnership in the process of sustainable growth.