The Interplay of Investment and Inflation in Driving Economic Growth

Abstract

Investment and inflation are two essential macroeconomic elements influencing the trajectory of economic growth. Investment enhances productive capacity, stimulates business activity, and creates employment, while inflation may limit growth by weakening purchasing power and creating uncertainty. Their effects vary according to the policy environment and overall economic conditions. This study employs a Systematic Literature Review (SLR) based on the PRISMA protocol to examine the relationship among investment, inflation, and growth. The process includes identifying relevant scholarly works, applying quality criteria to select studies, extracting key findings, and conducting thematic analysis to uncover patterns and knowledge gaps. The results emphasize that investment accelerates growth when directed toward productive sectors under a conducive climate. Conversely, high inflation constrains both consumption and investment, whereas moderate inflation can support growth by signaling strong domestic demand. Ensuring positive outcomes requires credible monetary frameworks, effective governance, and policies that promote fair investment distribution to sustain long-term development.