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Identifying Potential Benefits of International Portfolio Diversification: Sub-Saharan Economics

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  • Ehsan Ahmed

    (James Madison University)

  • Melvin D. Ayogu

    (James Madison University)

Abstract

Within the framework of Markowitz-Tobin portfolio theory, we empirically investigate potential benefits to a US investor from diversifying into equity markets in Sub-Saharan Africa. We infer, based on the state of these economies for the period studied, that potential gains accrue to a US investor from such diversification. For the optimal diversification strategy combination, portfolio equilibrium involves positive portfolio weights in all four countries; an outcome that is unambiguously conductive to regional economic growth.

Suggested Citation

  • Ehsan Ahmed & Melvin D. Ayogu, 1992. "Identifying Potential Benefits of International Portfolio Diversification: Sub-Saharan Economics," Journal of African Development, African Finance and Economic Association, vol. 1(1), pages 165-184.
  • Handle: RePEc:afe:journl:v:1:y:1992:i:2:p:165-184
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