Do Capital Inflows Boost Growth in Developing Countries?

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.

Bibliographic Details

Main Authors:	Calderon, Cesar, Nguyen, Ha
Format:	Working Paper biblioteca
Language:	English en_US
Published:	World Bank, Washington, DC 2015-06
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 https://hdl.handle.net/10986/22171
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