Public and private investment and economic growth in Malawi: an ARDL-bounds testing approach

Abstract

This paper examines the relative contribution of public and private investment to economic growth in Malawi from 1970 to 2014–using the recently developed autoregressive distributed lag model (ARDL) bounds testing procedure. The study also examines the crowding-out or crowding-in effect of public investment on private investment. Unlike most previous studies on this subject which are cross-sectional in nature, this study examines the differential impacts of public and private investment on economic growth focusing on Malawi. The main finding of this study is that while private investment contributes more to economic growth than public investment in Malawi, infrastructural public investment tends to crowd-in private investment.