Economic Studies in Togo show that Private investment has a ripple effect on both foreign direct investment and public investment

Abstract

In view of a macroeconomic context characterized by the revival of economic growth and the vision of having a better Togo in 2030, we have witnessed in recent years a major campaign to promote both domestic and foreign direct investment. Given the theoretical ambiguity of the relationship between these different types of investments, we offer in this paper an empirical validation of the interactions within the triptych FDI - public investment - domestic private investment. Estimates using a VECM showed that long-run private investment has a ripple effect on both foreign direct investment and public investment, which conversely also have a positive influence on domestic private investment. In addition, there is no significant relationship between public investment and FDI. Regarding the short term, there is a training of public investment in the previous period effect on FDI while domestic private investment tends to oust. Finally, an increase in FDI stimulates in the short term, both public and domestic private investment. Key words: Foreign direct investment, public investment, private investment, VECM, Togo.