The relationship between private investment and government investment after economic liberalization

Abstract

Investment is an important element of the development of the economy in which the private investment is considered as the key engine of economic growth of developed and developing countries. Empirical studies reveals that the private investment has been influenced by number of economic variables. Sri Lanka had introduced liberalized economic policies in 1977 and the policy changes have made wide impact on the economy including the private investment. The main objective of this study is focused on the empirical relationship private investment and government investment after the economic liberalization 1977. This study used secondary data which are time series data collected from various sources of Central Bank Annual Reports and magazines. The analysis was carried out for the period from 1977 to 2016. Multiple Regression Analysis was used to estimate the impact. Estimation method was Ordinary Least Squares (OLS). EViews 9 econometrics software were used for data analysis. The empirical evidence shows that there is a statistically significant positive impact of selected economic variables on the private investment.