MECHANICS OF INVESTMENT DRIVERS IN CHINESE ECONOMY

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By: SHOBANDE, OLATUNJI ABDUL, SHODIPE, OLADIMEJI TOMIWA
JEL: E22, D25, C26, E13
Keywords: China, Neoclassical model, Investment, Savings, Econometrics

We examine the predictors of investment in the Chinese economy for the period 1973- 2018. Our study adopts the Mark Nerlove (1962) partial adjustment hypothesis combined with instrumental econometric techniques based on the condition of the data used. Our results provide strong evidence that supports savings, export earnings, and final consumption expenditure as correlates of predictors of investment in China. Based on empirical results, we strongly recommend the integration of the unbaked population to a formal financial service to further stimulate more investment in the Chinese economy.