Inward Foreign Capital Flows and Economic Growth in African Countries
Inward Foreign Capital Flows and Economic Growth in African Countries

Summary/Abstract: The broad objective of the present study is to investigate empirically the impact of inward foreign capital flow along with some other explanatory variables namely gross capital formation, trade and human capital on economic growth using a balanced panel data spanning from 1977- 2013 for 10 African countries. The Hausman’s test suggests the use of randomeffects model is preferable to fixed- effects model. The panel data estimates reveal that role of foreign capital inflows in the forms of FDI inflows and remittance are growth encouraging, whereas, the role of external debt is growth discouraging for African countries. In the same way, gross capital formation and human capital are positively related to economic growth. The empirical findings of the study suggest that policy makers should formulate a healthy and conducive business environment that stimulates both foreign and domestic investors in the host countries. Along with intensive and sincere efforts are also required to develop human capacity through sufficient educational funding across all levels and countries.

• Details
• Contents