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Do Capital Inflows Boost Growth in Developing Countries? : Evidence from Sub-Saharan Africa

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World Bank (WB)

Abstract: This paper examines whether domestic output growth helps attract capital inflows and, in turn, capital inflows help boost output growth in a set of 38 Sub-Saharan African countries. Using a two-step approach to address reverse causality and omitted variable issues, the paper finds that output growth in countries in Sub-Saharan Africa does not attract capital inflows. However, aid and foreign direct investment inflows enhance growth, while sovereign debt inflows do not. A 1 percent increase in the level of real aid inflows raises growth of real output per capita by 0.022 percentage point. For foreign direct investment inflows, the figure is 0.002 percentage point.
Type: Working Paper
Publications & Research
Publications & Research :: Policy Research Working Paper
Link: http://hdl.handle.net/10986/22171
Subject: CAPITAL MARKETS
BORROWER
FUTURE GROWTH
FOREIGN CAPITAL
ECONOMIC GROWTH
CONCESSIONAL TERMS
SIGNIFICANT EFFECT
COMMODITY EXPORT
INTERNATIONAL CAPITAL
MONETARY ECONOMICS
FOREIGN INVESTORS
COUNTRY FIXED EFFECTS
ECONOMIC LITERATURE
INCOME
INTEREST
EXCHANGE
ECONOMIC REVIEW
DEVELOPING COUNTRIES
POLITICAL ECONOMY
WORLD DEVELOPMENT INDICATORS
WELFARE
FOREIGN DIRECT INVESTORS
PRICE
WEALTH
DEVELOPING COUNTRY
DEVELOPED COUNTRIES
ECONOMIC ACTIVITY
ADVANCED COUNTRIES
LONG TERM
DEVELOPMENT ECONOMICS
ADVANCED ECONOMIES
LOW-INCOME COUNTRIES
FOOD PRICE
DEBTS
INTEREST RATES
MONETARY FUND
DEBT
FINANCIAL CRISES
PER CAPITA GROWTH
FINANCIAL FLOWS
EXPLANATORY VARIABLES
BUSINESS CYCLE
PRIVATE CAPITAL FLOWS
LOANS
PRIVATE CAPITAL
OUTPUT GROWTH
MACROECONOMIC VULNERABILITIES
COMMODITY PRICE
INVESTMENT DECISIONS
EQUITY
DEVELOPMENT RESEARCH
GOLD STANDARD
INVESTORS
SOVEREIGN DEBT
HUMAN CAPITAL
COUNTRY LEVEL
ECONOMIC PERFORMANCE
CAPITAL
VOLATILITY
ECONOMIC STUDIES
FUTURE
FOREIGN DIRECT INVESTMENT
FOREIGN INVESTMENT
POOR COUNTRIES
LEVELS OF CAPITAL
INCOME COUNTRIES
CAPITAL FLOWS
INTERNATIONAL CAPITAL FLOWS
PRIVATE SECTOR
SOVEREIGN BORROWING
ECONOMICS
PUBLIC DEBT
OUTPUT
GROWTH DEBATE
FIXED EFFECTS
GOVERNANCE
ECONOMIC DEVELOPMENT
TRADE
SOVEREIGN DEBTS
INTERESTS
GROWTH RESIDUALS
ACCESS TO CAPITAL MARKETS
FINANCIAL DEVELOPMENT
GROWTH RESIDUAL
FINANCIAL MARKET
INTERNATIONAL FINANCIAL MARKET
CROSS-COUNTRY EVIDENCE
INVESTMENT
GROWTH REGRESSIONS
NEOCLASSICAL MODELS
SHARE
NEOCLASSICAL MODEL
FINANCIAL MARKETS
REAL OUTPUT
CAPITAL INFLOWS
EXTERNAL DEBT
CONSUMER PRICE INDEX
CAPITAL FLOW
INCREASE GROWTH
POLICY RESEARCH
FOREIGN BORROWING
MACROECONOMIC POLICIES
GROWTH MEANS
PRICE INDEX
COMMODITY PRICES
COUNTRY SPECIFIC
COMMODITY
DEVELOPMENT INDICATORS
PRICES
LEVEL OF CAPITAL
DEVELOPMENT POLICY
GROWTH




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