Title: Capital inflows and outflow and economic growth in Sub-Saharan Africa

Authors: Ibrahim Dolapo Raheem; Oluwatosin A. Adeniyi

Addresses: Department of Economics, University of Ibadan, Nigeria ' Department of Economics, University of Ibadan, Nigeria

Abstract: 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 generalised 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.

Keywords: foreign direct investment; FDI; official development assistance; ODA; remittances; capital flight; debt; economic growth; Sub-Saharan Africa; SSA; capital inflows; capital outflow.

DOI: 10.1504/IJEBR.2015.070276

International Journal of Economics and Business Research, 2015 Vol.10 No.1, pp.66 - 80

Received: 19 May 2014
Accepted: 16 Dec 2014

Published online: 20 Jun 2015 *

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