Drivers of Gross Capital Inflows : Which Factors Are More Important for Sub-Saharan Africa?

This paper discusses recent trends and investigates the drivers of capital flows across regions in the world, with emphasis on Sub-Saharan Africa. The post-global financial crisis behavior of capital flows into Sub-Saharan Africa is unique and diff...

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Main Authors:	Calderon, Cesar, Chuhan-Pole, Punam, Kubota, Megumi
Format:	Working Paper
Language:	English
Published:	World Bank, Washington, DC 2019
Subjects:	CAPITAL FLOWS FINANCIAL OPENNESS BOND MARKET DEBT MACROECONOMIC POLICY INVESTMENT FLOWS EXCHANGE RATES
Online Access:	http://documents.worldbank.org/curated/en/829871552395170556/Drivers-of-Gross-Capital-Inflows-Which-Factors-Are-More-Important-for-Sub-Saharan-Africa http://hdl.handle.net/10986/31403

id	okr-10986-31403
recordtype	oai_dc
spelling	okr-10986-314032021-07-12T06:23:33Z Drivers of Gross Capital Inflows : Which Factors Are More Important for Sub-Saharan Africa? Calderon, Cesar Chuhan-Pole, Punam Kubota, Megumi CAPITAL FLOWS FINANCIAL OPENNESS BOND MARKET DEBT MACROECONOMIC POLICY INVESTMENT FLOWS EXCHANGE RATES This paper discusses recent trends and investigates the drivers of capital flows across regions in the world, with emphasis on Sub-Saharan Africa. The post-global financial crisis behavior of capital flows into Sub-Saharan Africa is unique and differs from that of global capital flows. The structure of financial flows into Sub-Saharan Africa has shifted toward new sources, such as international bond issuances and debt inflows from non–Paris Club governments. The main message is that the behavior of capital flows into Sub-Saharan Africa differs from that of capital flows into global, industrial, and non–Sub-Saharan African developing countries. The regression analysis reveals that gross flows into Sub-Saharan African are predominantly influenced by external factors, such as foreign growth and uncertainty in global markets and policies. Capital flow behavior for Sub-Saharan African countries is different from that of industrial countries due to different economic structures, which render different transmission processes. The main findings suggest that pull and push factors are the driving forces of capital inflows for industrial countries and non–Sub-Saharan African developing countries—especially better economic performance, sound fiscal outcomes, a greater degree of financial openness, and stronger institutions. The impact of these drivers has become stronger in the 2000s. Macroeconomic policy can play an important role in attracting capital inflows. For instance, fiscal discipline promotes greater other investment inflows, and less flexible exchange rate arrangements (more exchange rate stability) foster portfolio investment inflows. 2019-03-14T20:55:15Z 2019-03-14T20:55:15Z 2019-03 Working Paper http://documents.worldbank.org/curated/en/829871552395170556/Drivers-of-Gross-Capital-Inflows-Which-Factors-Are-More-Important-for-Sub-Saharan-Africa http://hdl.handle.net/10986/31403 English Policy Research Working Paper;No. 8777 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 Sub-Saharan Africa
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English
topic	CAPITAL FLOWS FINANCIAL OPENNESS BOND MARKET DEBT MACROECONOMIC POLICY INVESTMENT FLOWS EXCHANGE RATES
spellingShingle	CAPITAL FLOWS FINANCIAL OPENNESS BOND MARKET DEBT MACROECONOMIC POLICY INVESTMENT FLOWS EXCHANGE RATES Calderon, Cesar Chuhan-Pole, Punam Kubota, Megumi Drivers of Gross Capital Inflows : Which Factors Are More Important for Sub-Saharan Africa?
geographic_facet	Africa Sub-Saharan Africa
relation	Policy Research Working Paper;No. 8777
description	This paper discusses recent trends and investigates the drivers of capital flows across regions in the world, with emphasis on Sub-Saharan Africa. The post-global financial crisis behavior of capital flows into Sub-Saharan Africa is unique and differs from that of global capital flows. The structure of financial flows into Sub-Saharan Africa has shifted toward new sources, such as international bond issuances and debt inflows from non–Paris Club governments. The main message is that the behavior of capital flows into Sub-Saharan Africa differs from that of capital flows into global, industrial, and non–Sub-Saharan African developing countries. The regression analysis reveals that gross flows into Sub-Saharan African are predominantly influenced by external factors, such as foreign growth and uncertainty in global markets and policies. Capital flow behavior for Sub-Saharan African countries is different from that of industrial countries due to different economic structures, which render different transmission processes. The main findings suggest that pull and push factors are the driving forces of capital inflows for industrial countries and non–Sub-Saharan African developing countries—especially better economic performance, sound fiscal outcomes, a greater degree of financial openness, and stronger institutions. The impact of these drivers has become stronger in the 2000s. Macroeconomic policy can play an important role in attracting capital inflows. For instance, fiscal discipline promotes greater other investment inflows, and less flexible exchange rate arrangements (more exchange rate stability) foster portfolio investment inflows.
format	Working Paper
author	Calderon, Cesar Chuhan-Pole, Punam Kubota, Megumi
author_facet	Calderon, Cesar Chuhan-Pole, Punam Kubota, Megumi
author_sort	Calderon, Cesar
title	Drivers of Gross Capital Inflows : Which Factors Are More Important for Sub-Saharan Africa?
title_short	Drivers of Gross Capital Inflows : Which Factors Are More Important for Sub-Saharan Africa?
title_full	Drivers of Gross Capital Inflows : Which Factors Are More Important for Sub-Saharan Africa?
title_fullStr	Drivers of Gross Capital Inflows : Which Factors Are More Important for Sub-Saharan Africa?
title_full_unstemmed	Drivers of Gross Capital Inflows : Which Factors Are More Important for Sub-Saharan Africa?
title_sort	drivers of gross capital inflows : which factors are more important for sub-saharan africa?
publisher	World Bank, Washington, DC
publishDate	2019
url	http://documents.worldbank.org/curated/en/829871552395170556/Drivers-of-Gross-Capital-Inflows-Which-Factors-Are-More-Important-for-Sub-Saharan-Africa http://hdl.handle.net/10986/31403
_version_	1764474250337452032

Drivers of Gross Capital Inflows : Which Factors Are More Important for Sub-Saharan Africa?

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