What determines private investment in Burundi?

NYONI, THABANI (2018): What determines private investment in Burundi?

Abstract

The economy of Burundi is currently under life support and private investment is still in its embryonic stage, after a series of civil wars that have characterised Burundi’s post – independence era. The political woes that Burundi continues to experience are one of the fundamental hindrances to private investment growth and development. Probably, this is the reason why most researchers, academicians and observers analyze the situation of Burundi only with political glasses; thereby undermining the role played by the economic structure. The perspective adopted in this study is quite different: the idea is to present a picture of Burundi from an economic point of view, partially leaving politics in the background and yet based on empirical evidence. This kind of approach does not imply that politics is unimportant! Our humble view is that politics is often constrained or even controlled, by economics! Private investment is the backbone of every economy and Burundi cannot be an exception. The study, while restricted to non – political determinants of private investment; seeks to uncover those factors that really matter to private investment, other than politics. Results indicate that population growth; exports and private sector credit are the most powerful factors that affect private investment in Burundi. The results provide a concrete justification for the policy recommendations suggested.

• Item Type: MPRA Paper
• Language: English
• Keywords: Private investment, public investment, private sector credit, population growth, Burundi
• Subjects: E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy > E22 - Investment ; Capital ; Intangible Capital ; Capacity; E - Macroeconomics and Monetary Economics > E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook

References

[1] ADB (2011). Country Strategy Paper – Burundi, ADB

[2] Ali, S., Ali, A., & Amin, A (2013). Impact of population on economic development in Pakistan, Middle – East Journal of Scientific Research, 18 (4): 483 – 491

[3] Arndt, C & Jones, S (2015). Assessing foreign aid’s long run contribution to growth and development, World Development, 69: 6 – 18

[4] Bearce, D. H & Tirone, D. C (2008). Foreign aid, recipient growth and the strategic goals of the donor government, Unpublished Manuscript, University of Pittsburgh

[5] Becker, E., Glaeser, E., & Murphy, K (1999). Population growth and economic growth, American Economic Review, 89 (2): 145-149

[6] Chirinko, R. S (1993). Business fixed investment spending: modeling strategy, empirical results and policy implications, Journal of Economic Literature, 31: 1875 – 1911

[7] Christensen, Z., Homer, D., & Nielsen, D (2010). We don’t need no education, Aid Transparency and Development Finance Conference, Oxford University, UK

[8] Dethier, J. J., & Moore, A (2012). Infrastructure in developing countries: an overview of some economic issues, ZEF Discussion Papers on Development Policy, 165, University of Bonn

[9] Eduardo, C., & Christian, D (2011). Public investment in developing countries: A blessing or a curse? Journal of Comparative Economics, 39 (1): 65 – 81

[10] Evans, P., & Karas, G (1994). Are government activities productive? Evidence from panel of U.S states, The Review of Economics & Statistics, 76 (1): 1 – 11

[11] Fafchamps, M (2003). Engines of economic growth and Africa’s economic performance, in Emmanuel Nnandozie ed, African Economic Development, Academic Press

[12] Hare, G., & Fofie, F. O (2009). Investment behaviour in a difficult institutional environment, Herriot – Watt University

[13] Investment Guide (2014). Investment Guide – Burundi, ALN

[14] Loungani, P., & Rush, M (1995). The effect of changes in reverse requirements on investments and GNP, Journal of Money, Credit and Banking, 27: 511 – 526

[15] Makuyana, G., & Odhiambo, N. M (2016). Public and private investment and economic growth in Zimbabwe: an empirical test, UNISA Economic Research WPS

[16] Mallick, S & Moore, T (2006). Foreign aid in capital growth model, EEFS Conference, Crete, Greece, 18 – 21 May

[17] Mallick, S. K (2000). Determinants of long term growth in India: A Keynesian Approach, Progress in Development Studies

[18] Malthus, T (1798). An essay of the principle of population, London – Pickering.

[19] Musisinyani, B. J., Nyoni, T., & Nyoni, M (2017). The Impact of Current Account Deficits on Economic Growth in Zimbabwe, International Journal for Innovative Research in Multidisciplinary Field, 3 (8): 01 – 16

[20] Ndikumana, L (2000). Financial determinants of domestic investment in Sub – Saharan Africa: evidence from panel data, World Development, 28 (2): 381 – 400

[21] Nkurunziza, J. D., & Ngaruko, F (2000). Explaining growth in Burundi: 1960 – 2000, CSAE WPS

[22] Nkurunziza, J. D., Ngaruko, F (2005). Why has Burundi grown so slowly? AERC

[23] Nyoni, T (2017). The Curse of Corruption in Zimbabwe, International Journal of Advanced Research and Publications, 1 (5): 285 – 291

[24] Nyoni, T & Bonga, W. G (2017f). An Empirical Analysis of the Determinants of Private Investment in Zimbabwe, Dynamic Research Journals Journal of Economics & Finance, 2 (4): 38-54

[25] Nyoni, T & Bonga, W. G (2017h). Population growth in Zimbabwe: A Threat to Economic Development? Dynamic Research Journals Journal of Economics and Finance, 2 (6): 29 – 39

[26] Nyoni, T & Bonga, W. G (2017i). Foreign Aid – Economic Growth Nexus: A Systematic Review of Theory & Evidence from Developing Countries, Dynamic Research Journals Journal of Economics and Finance, 2 (7): 01 – 16

[27] Oshikoya, R (1994). Financial determinants of domestic investment in Sub – Saharan Africa

[28] Rajan, R & Subramanian, A (2008). Aid and growth: what does the cross –country evidence really show? The Review of Economics and Statistics, 90 (4): 643 – 665

[29] Safdari, M., & Mehrizi, M. A (2011). Investigating the effect of foreign aid and investment on economic growth in Iran, International Review of Business Research Papers, 7 (4): 150 – 158

[30] Sahoo, P., Dash, R. K., & Nataraj, G (2010). Infrastructure development and economic growth in China, Institute of Developing Economies, IDE Discussion Paper No. 261

[31] Salish, A. A., & Ogwumike, F. O (2010). Aid, macroeconomic policy environment and growth: evidence from Sub – Saharan Africa, Journal of Economic Theory, 4 (2): 59 – 64

[32] Solow, R (1956). Technical change and the aggregate population function, Review of Economics and Statistics, 39: 312-320

[33] Tartiyus, E. H., Dauda, I. M., & Peter, A (2015). Impact of population on economic growth in Nigeria (1980 – 2010), International Journal of Humanities and Social Science (IOSR - JHSS), 20 (4): 115-123

[34] Zou, Y (2003). On the relationship between public and private investment: an empirical study of Japan, Journal of Economic Policy Studies, 1: 18 – 29