The impact of fiscal policy on investment in the south Africa region

In a changing global economy, that is more and more competitive, governments need an efficient policy parameter to improve constantly their economy. In democratic countries, fiscal policy is one of the most important disposable instruments for governments to make an impact into the economy. Since that, much research has shown up in developed countries the relationship between fiscal policy parameters and economic growth, and investment. The aim of this thesis is to study the potential relationship between fiscal policy parameters and investment in developing countries, especially in the South African region. A structured theoretical and practical study enables us to reach a conclusion whether the actual fiscal policies in these countries help to attract more private investment or not. To confirm this, we need to confirm the existence of a certain consistent relationship between fiscal policy parameters and investment in the concerned countries. After the review of the existing literature about fiscal policy theory, investment and the relationship between them, and the background information about the studied area, we make an empirical study thanks to the co-integration theory. In contradiction with the existing literature, we will see that the relationship is not obvious in developing countries, and that there may be a certain preliminary framework that might contribute to the efficiency of fiscal policy on investment.