IS EXTERNAL DEBT A DETERMINANT OF PRIVATE INVESTMENT? EVIDENCE FROM SOUTH AFRICA

Authors : Brian Muyambiri, John-baptiste Mabejabe

Pages : 62-72

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Publication Date : 2025-01-31

Article Type : Research Paper

Abstract :This article analyzes the relationship between external debt and investment in South Africa, incorporating financial development, trade, savings, and economic growth as intermittent factors. The study employs an autoregressive distributed lag (ARDL) bounds testing approach as a method of analysis. The study findings indicate that, in both the short term and the long run, external debt has a detrimental impact on private investment in South Africa. Additional findings indicate that factors such as economic growth, financial development, and gross domestic saving do not play a significant role in explaining fluctuations in private investment levels in South Africa. This suggests that these variables cannot be effectively utilized as policy tools to stimulate private investment in the country, both in the short and long run. Additionally, the analysis suggests that there is a favorable correlation between trade openness and private investment. From a policy and strategy standpoint, the focus should be on reducing external debt while implementing policies that encourage trade openness.
Keywords : Dış Borç, Yatırım, Ekonomik Büyüme, Güney Afrika