Testing the extent of the effect of competition between public investment and private investment in the Egyptian economy during the period (1970 - 2017) “Estimating a standard model”

Document Type : Original Article

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Assistant Professor of Economics - Faculty of Economics and Political Science - Alexandria University

Abstract

The research aimed to estimate and measure the relationship between public investment and private investment, and then, to verify the extent of the crowding out effect between public and private investment in Egypt during the period (1970 - 2017), that is through studying the relationship between them in economic literature, through a descriptive analysis of the development of each of them in Egypt during the period of the study, and ending with the use of the standard model that depends on the joint co-integration method of Johansson, where the relationships between them were measured through the (VECM) model. The results of the long-term measurement showed that the relationship between real domestic private investment and real public investment was negative, which means that there is crowding out effect between them. It was also found that the relationship between them was positive in the short term, while it turned into negative in the long term. The results of the long-term causal relationships also showed the existence of a two-way relationship between private domestic investment and public investment, as each causes the other to decline. The short-term results were somewhat consistent with the long-term results, although the results were more overlapping and more visible in the long term.

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