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

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...

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Main Authors:	Calderon, Cesar, Nguyen, Ha
Format:	Working Paper
Language:	English en_US
Published:	World Bank, Washington, DC 2015
Subjects:	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
Online Access:	http://documents.worldbank.org/curated/en/2015/06/24604145/capital-inflows-boost-growth-developing-countries-evidence-sub-saharan-africa http://hdl.handle.net/10986/22171

id	okr-10986-22171
recordtype	oai_dc
spelling	okr-10986-221712021-04-23T14:04:07Z Do Capital Inflows Boost Growth in Developing Countries? : Evidence from Sub-Saharan Africa Calderon, Cesar Nguyen, Ha 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 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. 2015-07-16T14:52:33Z 2015-07-16T14:52:33Z 2015-06 Working Paper http://documents.worldbank.org/curated/en/2015/06/24604145/capital-inflows-boost-growth-developing-countries-evidence-sub-saharan-africa http://hdl.handle.net/10986/22171 English en_US Policy Research working paper,no. WPS 7298; Policy Research Working Paper;No. 7298 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research Publications & Research :: Policy Research Working Paper Africa North Africa
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English en_US
topic	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
spellingShingle	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 Calderon, Cesar Nguyen, Ha Do Capital Inflows Boost Growth in Developing Countries? : Evidence from Sub-Saharan Africa
geographic_facet	Africa North Africa
relation	Policy Research working paper,no. WPS 7298;
description	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.
format	Working Paper
author	Calderon, Cesar Nguyen, Ha
author_facet	Calderon, Cesar Nguyen, Ha
author_sort	Calderon, Cesar
title	Do Capital Inflows Boost Growth in Developing Countries? : Evidence from Sub-Saharan Africa
title_short	Do Capital Inflows Boost Growth in Developing Countries? : Evidence from Sub-Saharan Africa
title_full	Do Capital Inflows Boost Growth in Developing Countries? : Evidence from Sub-Saharan Africa
title_fullStr	Do Capital Inflows Boost Growth in Developing Countries? : Evidence from Sub-Saharan Africa
title_full_unstemmed	Do Capital Inflows Boost Growth in Developing Countries? : Evidence from Sub-Saharan Africa
title_sort	do capital inflows boost growth in developing countries? : evidence from sub-saharan africa
publisher	World Bank, Washington, DC
publishDate	2015
url	http://documents.worldbank.org/curated/en/2015/06/24604145/capital-inflows-boost-growth-developing-countries-evidence-sub-saharan-africa http://hdl.handle.net/10986/22171
_version_	1764450342586548224

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

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