The Impact of Public Investment on Private Investment in Botswana: A Disaggregated Approach

Abstract

The study examined the crowding in or out effect of public investment on private investment in Botswana from 1980 to 2018 using the autoregressive distributed lag bounds testing approach. The findings of the study indicate that infrastructure public investment negatively affects private investment while non-infrastructure public investment has a positive impact on private investment in the short run. The study concluded that infrastructure public investment crowd out private investment while non-infrastructure public investment crowds in private investment only in the short run. The recommendation emanating from the study is that the government should spend more on non-infrastructure public investment in order to crowd in private investment, especially in the short run, and introduce more initiatives to promote the role of the private sector in growing the economy.