Date of Award

Spring 2008

Document Type


Degree Name

Doctor of Philosophy (PhD)


Public Administration and Urban Policy

Committee Director

Berhanu Mengistu

Committee Member

John Lombard

Committee Member

David Selover

Committee Member

Nancy A. Bagranoff

Committee Member

John Morris


The general macroeconomic and political difficulties experienced by many Sub-Saharan African countries in the late 1980s has led to economic and political reforms to improve private investment performance. It has been estimated that Sub-Saharan African countries needed to boost private investment in gross domestic product some 25% in the 1990s to achieve sustainable growth and development (Pfefferman and Madarassy, 1989). However, private investment performance has fallen short of the estimated 25%, and remained stagnant between 12.4% and 14.1% per annum from 1993 to 2002.

The purpose of this study therefore is to examine the influence of macroeconomic factors and democracy, proxied by political rights and civil liberties scores, on gross private investment in Sub-Saharan Africa from 1993 to 2002. The study uses the neoclassical investment model which suggests that output, the real interest rate, the price of capital, the rate of depreciation of capital, and public sector investment are the main determinants of private investment. Also, the study examines the effects of other variables such as the per capita income, the credit availability to the private sector, the general price level, the external shock, the currency depreciation or devaluation, and the debt overhang, on private investment. The study utilizes panel data from 1993 to 2002 for 43 Sub-Sabaran African countries and employs the panel least squares, the fixed effects and the random effects techniques to estimate the model. Following the Hausman test statistics, the study placed more weight on the fixed effects model and found that the growth rate of real output, the per capita income, and the past level of private investment are the significant factors affecting private investment in Sub-Saharan Africa. Democracy exerts the expected positive impact albeit insignificantly.