Do Good Institutions Matter for Private Investment? Evidence from East Africa

Abstract

This study sought to investigate the link between private investment decisions and various governance institutions. This link is empirically tested for a panel of 4 East Africa countries by estimating a random effect model for the period 1996-2015. While the literature has placed special emphasis on the role of corruption on private investments, we explore a wider range of institutional aspects. Estimations results show that government effectiveness, regulatory quality, control of corruption, and rule of law influence the level of private investments.

Keywords: Institutions; Investments; East Africa; Random Effect

JEL Classification: E02, E6, C33