The determinants of private investment: A review of international literature

Abstract

This study reviews the empirical literature on the determinants of private investment. The study evaluated and analysed empirical research on the determinants of private investment in both developed and developing countries. The findings show that the key determinants of private investment and their impacts vary across countries and depend on the methodology used. Overall, the study found that credit to the private sector, interest rates, public investment, inflation, GDP growth, terms of trade, savings, external debt, and exchange rate are some of the key determinants of private investment. The study also found that economic growth, public investment, and credit to the private sector were generally positive determinants, while inflation, the real interest rate, and the exchange rate were mostly negative determinants.