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Determinants of Private Sector Investment: Evidence from Mauritius, 1981-2014

Author

Listed:
  • Roopnarain Darshan Sharma

    (Faculty of Law and Management, University of Mauritius, Mauritius)

  • Gunesh Ramlugun Vidisha

    (Faculty of Law and Management, University of Mauritius, Mauritius)

Abstract

Studies on private sector investments abound, yet few ever investigate the impact of corporate governance on private sector investment. Consequently, this study looks into the long-run determinants and short-run dynamics of domestic private sector investment during the period 1981-2014 in Mauritius and assesses the impact of corporate governance on such investments. For this purpose, we employ the Auto-Regressive Distributed Lag (ARDL) approach to cointegration as the time series econometric technique to examine the long-run determinants, deciphering the short-run dynamics of those determinants by means of an error correction mechanism within the corresponding ARDL framework. The results reveal that corporate governance reforms in the long run determine the Gross Domestic Product (GDP) level, the real interest rate, financial development, inflation, real exchange rate, domestic savings, and private sector investment. Moreover, the short-run dynamics indicate that the real interest rate, financial development, inflation, savings, and corporate governance reforms in the short run convincingly influence private sector investment. Given its unique microeconomic conditions, this study contributes to an understanding of private sector investment in Mauritius and is of significance to policy makers. It further shows the significance of corporate governance on private sector investment. We also discuss areas for future research and study limitations.

Suggested Citation

  • Roopnarain Darshan Sharma & Gunesh Ramlugun Vidisha, 2018. "Determinants of Private Sector Investment: Evidence from Mauritius, 1981-2014," International Journal of Business and Economics, School of Management Development, Feng Chia University, Taichung, Taiwan, vol. 17(3), pages 255-275, December.
    • Handle: RePEc:ijb:journl:v:17:y:2018:i:3:p:255-275
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    Citations

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    Cited by:

    1. Amarjit Gill & Harvinder S. Mand & Afshin Amiraslany & John D. Obradovich, 2019. "The Impact of Internal Financing Sources and Bank Financing on Information Technology Investment," International Journal of Business and Economics, School of Management Development, Feng Chia University, Taichung, Taiwan, vol. 18(1), pages 1-16, June.
    2. Olatunji Abdul Shobande & Oladimeji Tomiwa Shodipe, 2019. "Mechanics Of Investment Drivers In Chinese Economy," Review of Economic and Business Studies, Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, issue 23, pages 7-32, June.
    3. Amarjit Gill, 2020. "Impact of Family Control on Intrafamily Succession Intention and Firm Investment," International Journal of Business and Economics, School of Management Development, Feng Chia University, Taichung, Taiwan, vol. 19(3), pages 237-256, December.

    More about this item

    Keywords

    corporate governance; private sector investments; Mauritius;
    All these keywords.

    JEL classification:

    • C50 - Mathematical and Quantitative Methods - - Econometric Modeling - - - General
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E69 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Other
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General

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