Abstract: Using panel data for a large number of countries and a panel-data procedure, this study seeks to determine the effect of private investment, economic freedom and openness on the rate of economic growth. A model of the neoclassical variety is estimated by regressing growth rate of real GNP per capita on (i) the rate of population growth, (ii) log of real GDP per capita for the "initial" year, (iii) aggregate investment as percent of GDP, (iv) private investment as percent of GDP, (v) trade in goods and services as percent of GDP as a proxy for openness, (vi) average years of schooling of population (age 15+) as a proxy for human capital and (vii) the summary rating for economic freedom reported by Gwartney and Lawson (2000). The sample includes 70 countries, of which 56 are less developed and the panel data cover four 5-year periods from1980 to 1997. In addition to separate cross-section regressions for each period, ‘intercept` dummy variables for individual countries as well for different periods in the pooled model are used to capture the country-specific, fixed effects and structural change over time respectively. The estimates indicate that (a) increased share of private investment does not help economic growth and (b) economic freedom and openness have significant positive influence on economic growth. The effects of aggregate investment and human capital appear week.