Template-Type: ReDIF-Article 1.0
Author-Name: Vesna Garvanlieva Andonova
Author-Email: vesna_nl@yahoo.com
Author-Workplace-Name: Faculty of Economics-Skopje, Ss. Cyril and Methodius University in Skopje, North Macedonia; 
Center for Economic Analyses, CEA, North Macedonia
Title: Public, Private and Foreign Investment Nexus in the Republic of North Macedonia: Crowding-In or Out Effect?
Abstract: The  levels of  investments  in  North  Macedonia have  been perceived for  a  long  time  as sub-optimal, with  significant capital  budget  bias, 
with  regularly  overestimated  plans  vs.  outturn.  The  research problem elaborated is whether the structure of investments matters. 
Thus the objective of the article is to examine if there is a complementarity or substitutability between public and private investment, 
as well  as  the  role  of  foreign  direct  investments  in  this  nexus.  Within  the  paper the  hypothesis  of existence of crowding-in or crowding-out effect 
of the public investment and foreign direct investment exert over private investment in North Macedonia is tested. The crowding-in and –out effect is tested with 
an autoregressive distributed lag bound testing. The results indicate crowding-out effect of public over private investments,with significance of the foreign direct investments variable 
and at the same time crowding-in effect of foreign direct investments over private domestic investments. The crowding-out effect is immediate and short run.
The results imply of a need for closer examination of the fiscal policies for public investment with efforts for improved public investment performance processes. 
The drop in GDP associated with the pandemic mainly reflects the negative innovations to the consumption preference shock and to the permanent technology shock.
Classification-JEL: E22, H54, H11
Keywords: private  investment, public investment, foreign  direct  investment, crowding-out-ineffect, ARDL bound testing 
Journal: Economy, Business & Development: An International Journal
Pages: 1-13
Volume: 3
Issue: 1
Year: 2022
Month: May
DOI: 10.47063/ebd.00007
File-URL: https://journals.ukim.mk/index.php/ebd/article/view/1591/1432
File-Format: Application/pdf
Handle: RePEc:aoh:journl:v:3:y:2022:i:1:p:1-13