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DETERMINANTS OF INVESTMENTS: A CASE STUDY OF COTE D’IVOIRE

Year 2022, Volume: 11 Issue: 4, 153 - 160, 31.12.2022

Abstract

Purpose- Based on the importance of investments in supporting the economic growth in the country, the main objective of this study is to investigate the determinants of the investment in Cote d’Ivoire over the period 1980-2020. In order to achieve the objective, this study examines the interactive effect of external debt, communication infrastructures, imports and inflation on the investments in Cote d’Ivoire.
Methodology- Annual time series data over the period 1980-2020 were employed in this study. The data are obtained from the World Bank. The ADF unit root test, Johansen cointegration test, OLS model, Granger causality test, and CUSUM test were applied to analyze the data. Ordinary Least Squares (OLS) model has been used in this study to estimate the coefficient of the variables, and it has been subjected to a number of statistical diagnostic tests, namely, the normality, serial correlation, and heteroscedasticity tests to ascertain its statistical adequacy.
Findings- The ADF unit root test results indicated that all variables in the model are not stationary at the level but became stationary after first differencing. The Cointegration test pointed to a significant long-run relationship among the variables. Besides, the results of OLS model showed that investment is positively and significantly related with communication infrastructures, importing and inflation, but it is related negatively and insignificantly with external debt. Imports have the biggest effect on the investment. The Granger causality test shows that there are no short-run causality relationships between the variables. However, there are bidirectional long-run causality relationships between investment, external debt and importing, and unidirectional long-run causality relationships running from communication infrastructures and inflation to investment. Lastly, CUSUM test indicated that there are no structural changes in the model.
Conclusion- The study therefore recommends that the government should use external debt more efficiently, reduce corruption, improve the infrastructure and create an attractive investment climate, as well as reducing most tariff and nontariff barriers, which will support the investment in the country.

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Details

Primary Language English
Subjects Economics, Finance, Business Administration
Journal Section Articles
Authors

Adel Shakeeb MOHSEN This is me 0000-0002-6464-0248

Publication Date December 31, 2022
Published in Issue Year 2022 Volume: 11 Issue: 4

Cite

APA MOHSEN, A. S. (2022). DETERMINANTS OF INVESTMENTS: A CASE STUDY OF COTE D’IVOIRE. Journal of Business Economics and Finance, 11(4), 153-160.

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