Abstract:
A market-friendly regulatory environment is key for private sector investment. In this
paper, we examine the impact of business regulatory quality on private sector investment
in Botswana. The paper finds that the business regulatory environment stimulates private
sector investment in the long term and this phenomenon occurs when the quality of
bureaucracy improves, among other factors. Other critical factors affecting private
sector investment examined in this paper include; corporate credit, output and public
infrastructure investment. Private sector investment responds positively to increases
in corporate credit in the short term but not responsive in the long term. Economic
activities support private sector investment positively but weak. On the other hand,
public infrastructure investment crowds in(out) investment in the short and long term
respectively. Policy wise, Botswana should further deepen its efforts towards creating
a market-friendly regulatory environment and also consider how business regulatory
quality interact with other policy variables for better investment and growth outcomes.
