The Impact of Domestic Investment on Economic Growth New Policy Analysis from Algeria

Abstract

This paper investigates the relationship between domestic investment and economic growth in Algeria. In order to achieve this purpose, annual data for the period between 1969 and 2015 was tested by using co integration analysis of Vector Error Correction Model. The equation of the long run relationship shows that domestic investment has a negative effect on economic growth. However, in the short run term, the Granger Causality Tests shows that domestic investment cause economic growth in Algeria. These results prove that domestic investment is a source of economic growth for Algeria, but unfortunately it suffers from several obstacles and problems that are directly related to the poor management and the weak strategy for development and investment, Lead to the appearance of this long-term negative effect, if it left in this situation.