Openness, investment and growth in Sub-Saharan Africa

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Periodical article

Title:	Openness, investment and growth in Sub-Saharan Africa
Authors:	Sala, Hector Trivín, Pedro
Year:	2014
Periodical:	Journal of African Economies (ISSN 0963-8024)
Volume:	23
Issue:	2
Pages:	257-289
Language:	English
Geographic term:	Africa
Subjects:	economic development investments economic models
External link:	https://doi.org/10.1093/jae/ejt027
Abstract:	This paper revisits the determinants of economic growth in Sub-Saharan Africa by looking at conditional and unconditional convergence, and by focusing on the growth incidence of globalisation, domestic investment (DI), and foreign direct investment (FDI). The authors use annual time-series to estimate dynamic panel data models that exploit all sample information (i.e., they do not only use 5-year averages as is standard in the literature). The authors find the rate of conditional convergence to be around 4 percent, and the growth impact of FDI and DI to be greater the greater is the change in the degree of economic openness. They also find a net crowding out effect between both types of capital so that larger amounts of FDI reduce the impact of DI on economic growth (and vice versa). These results are obtained through the estimation of multiplicative interaction models which allows us to evaluate the interactions between changes in openness, DI and the net flows of FDI. This constitutes a novelty in the appraisal of the globalisation and investment impact on economic growth. Bibliogr., notes, ref., sum. [Journal abstract]