Domestic investment and economic growth in Sub-Saharan Africa: An engle granger residual based test approach

This paper investigates the effect of domestic investment on economic growth in Sub-Saharan Africa spanning the period 1970 to 2004. The study applied the ADF Stationarity test, Residual Based Test and Error Correction Model. Series variables are stationary at 1(1). The result for ADF residual based test STATRESID reveals a long run relationship between Domestic Investment and Economic Growth in Sub-Saharan Africa while theresult for error correction model also indicates a positive short run relationship between domestic investment and economic growth. Policy maker should consider making a friendly climate for domestic actors through sound macroeconomic fundamentals, policy efficacy and flexibility and soft loans to augment savings and investment capital this will positively impacts on per capital income and effective demand of Sub-Saharan populace reducing unemployment and poverty.