Sub-Saharan Africa's Integration in the Global Financial Markets

Abstract

This Working Paper should not be reported as representing the views of the IMF.

Capital Flows and Economic Growth in Ghana

“…In light of the direct and indirect benefits of capital flows, Fischer (1998) notes that not only should capital account liberalization be seen as inevitable but also the benefits far outweigh the costs. Delechat, Wagh, Ramirez, and Wakeman-Linn (2009) examine the impact of capital flows on growth for 44 SSA countries over the period 2000-2007 and report a significant positive relationship between the two variables. Seetanah (2009) finds that FDI explains growth in 39 SSA countries.…”

The Effects of Capital Flows on Economic Growth in Senegal

“…Similarly, Johnson (2006), using both cross-section and panel data analysis on a data set covering 90 countries during the period 1980-2002, finds that FDI inflows enhance economic growth in developing economies but not in developed economies. Deléchat et al (2009) examine the impact of capital flows for 44 SSA countries over the period from 2000 to 2007 and report a significant positive relationship between the two variables. Seetanah (2009) finds that FDI explains growth in 39 SSA countries.…”

Global Private Capital Flows and Development Finance in Sub-Saharan Africa: Exemplary Performers, Lessons for Others and Strategies for Global Competitiveness in the Twenty-First Century

“…Governments in SSA economies would be well-advised to redouble their efforts to develop and strengthen these markets, to put their countries in a position to attract private capital in the future. At the same time, an important lesson of the recent global financial crisis should be to put in place strong monitoring, regulatory and supervisory frameworks, to avoid a buildup of balance-sheet vulnerabilities (Delechat et al, 2009). …”

“…As a result, in 2007 for the first time ever, private capital flows increased almost six-fold since 2000 to reach an estimated $84bn, double the amount of ODA to SSA. The onset of the financial crisis radically changed the picture, with a drying up and, in some cases such as South Africa, a large reversal of capital flows (Delechat et al, 2009). …”