The Impact of Domestic Investment in the Industrial Sector on Economic Growth with Partial Openness: Evidence from Tunisia

This paper investigates the relationship between industrial domestic investment and economic growth in Tunisia. In order to achieve this purpose, annual data for the periods between 1969 and 2015 were tested using the Johansen cointegration analysis of VECM and the Granger-Causality tests. According to the result of the analysis, it was determined that there is a negative relationship between industrial domestic investment and economic growth in the long run term. Otherwise, and on the basis of the results of the Granger causality test, we noted a unidirectional causal relationship from economic growth to industrial domestic investment in the short term. These results provide evidence that domestic investment in industrial sector, thus, are not seen as the source of economic growth in Tunisia during this large period and suffer a lot of problems and poor economic strategy.