Full Text Available
Note: Clicking the button above will open the full text document at the original institutional repository in a new window.
Foreign Capital Flows, Financial Development and Growth in Sub-Saharan Africa
This paper investigated how financial development influences the relationship between foreign direct investment (FDI) and economic growth in selected Sub-Saharan Africa (SSA) countries. This study considered three alternative measures of financial development (FD) and their impacts on the FDI-growth...
Saved in:
| Format: | Article |
|---|---|
| Published: |
2015
|
| Subjects: | |
| Tags: |
No Tags, Be the first to tag this record!
|
| Summary: | This paper investigated how financial development influences the relationship between foreign direct investment (FDI) and economic growth in selected Sub-Saharan Africa (SSA) countries. This study considered three alternative measures of financial development (FD) and their impacts on the FDI-growth linkage. It also explored the possibility of nonlinearities in the tripartite relationships. The results showed a positive influence of FDI on economic growth. Financial system development also had growth-promoting impact in the presence of FDI flows. Interestingly, these findings remained robust when potential endogeneity was accounted for using a well known instrumental variable (IV) estimator. Digging deeper, the findings also supported the existence of non-linearities in the role of FD in the FDI-growth association. In policy terms, these SSA countries will reap more growth benefits from foreign capital flows especially if financial reforms are sustained. |
|---|