The impact of investment on economic growth

The aim of this study is to highlight the determinants of investment in Senegal. The data used cover the period from 1972 to 2004, and come from the Senegalese National Accounts database. We applied a theoretical model based on the use of VAR methodology tools such as VECM (causality in the sense of Granger, impulse response functions, forecast variance decomposition, etc.) to measure this aspect of investment determinants. The results of the VECM model highlight the pre-eminence of Gross Domestic Product (GDP) and the interest rate as determining variables in maintaining investment. The economic policy recommendations are to accentuate government action through a sustained investment profile and an improved business climate.