Search

Abstract: This paper studies the role played by the quality of property rights in the linkages of international capital flows into sub‐Saharan African (SSA) economies. Using panel data of 36 SSA countries over the period 1996–2015 and the ARDL procedure with the Pooled Mean Group regression method appropriate for non‐stationary panel data estimation, we account for the joint effects of property rights quality and openness to foreign capital flows on economic growth. We uncover the existence of a property rights quality threshold beyond which property rights either amplifies the spillovers effects or attenuates the negative effect of capital flows on economic growth. For instance, it takes a level of property rights of at least 60 to have a positive long‐term impact of capital flows on economic growth in natural resource‐poor African countries. The quality of property rights matters more to obtain spillover effects of capital flows on growth in natural resource‐poor countries than in their peer natural resource‐rich countries. Finally, with regard to the countries' income levels, capital flows have significant long‐term spillovers effects on economic growth in advanced African economies than in their low‐income peers. [ABSTRACT FROM AUTHOR]

This paper uses the bias-corrected least-squares dummy variable (LSDV) estimator to examine the relationship between economic growth and four different types of private capital inflows (cross-border bank lending, foreign direct investment (FDI), bonds flows and portfolio equity flows) on a sample of 15 selected sub-Saharan African countries over the period 1980–2008. Our results show that FDI and cross-border bank lending exert a significant and positive impact on sub-Saharan Africa's growth, whereas portfolio equity flows and bonds flows have no growth impact. Our estimates suggest that a drop by 10 per cent in FDI inflows may lead to a 3 per cent decrease of income per capita growth in sub-Saharan Africa, and a 10 per cent decrease in cross-border bank lending may reduce growth by up to 1.5 per cent. Therefore, the global financial crisis is likely to have an important effect on sub-Saharan Africa's growth through the private capital inflows channel. [ABSTRACT FROM AUTHOR]

In theory, private capital flows (PCF) augment domestic capital for economic growth. In sub-Saharan African (SSA) economies, foreign direct investment per capita (FDIC), portfolio investment per capita (PIC) and bank lending per capita (BLC) components of PCF grew inversely to gross domestic product per capita (GDPC). Previous studies have attributed this problem largely to recipient economies' structural features, with little attention paid to PCF shocks (sharp fluctuations from the equilibrium path). Employing annual data on 14 SSA countries from 1990 to 2013, this study estimated a neoclassical growth model to evaluate the effects of PCF shocks on the SSA countries' economic output and growth. The results showed that private capital flows positively affected economic output and growth, as hypothesized in theory. The effects of PCF shocks were negative, however, and are thus culpable for poor response of the region's economic performance to inflows of private capital. [ABSTRACT FROM AUTHOR]