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Capital Inflows and Outflow and Economic Growth in Sub-Saharan Africa


This paper examined both the total effect and the individual effects of the sources of capital inflow (Foreign Direct Investment (FDI), Official Development Assistance (ODA), remittances and debt) as well as capital outflow (capital flight) on economic growth for 33 countries in Sub- Saharan Africa (SSA) for the period spanning 1970 to 2010. Using System Generalized Method of Moments (Sys-GMM), the findings showed that FDI and remittances significantly contributed to growth with the latter taking the lead. Furthermore, the results also indicated that capital flight and debt constituted significant drags on growth, while the exact impact of ODA was uncertain. The key policy implication drawn from the results is for policy makers to design policies that would curb the incidence of capital flight and ensure an investment friendly environment. This, of course, is with a view to further attracting remittances and FDI into SSA.

Corporate Author: 
Ethipian Economics Association (EEA)
Ethipian Economics Association (EEA)
Primary Descriptors: 

Capital Movement

Secondary Descriptor: 

FDI,  Remittance

Geographic Descriptors: 
Sub-Saharan Africa
Cataloge Date: 
Broad Subject heading: 
Economic Development- Sub-Saharan Africa
Call Number: 
330.963 PRO 2015
Serial Key Title: 
Proceedings of the 19th Annual Conference of Africa Region Chapter of the Econometric Society
Publication catagory: 
Content type: 
Publication date: 
2015-06-01 00:00:00
Conference Place: 
EEA Conference Center
Place of publication: 
Addis Ababa, Ethiopia
Type of material: 
Current frequency: 
Conference date: 
July 16 to 19, 2014