Capital Mobility, Saving and Investment Link: Evidence from Sub-Saharan Africa
The saving- investment correlation and its implication for capital mobility across borders has been sharply debated in the literature since the pioneering work of Feldstein and Horioka (1980). In this paper, the debate is extended to six emerging economies in Africa using cointegration tests proposed by Johansen and Juselius, and causality tests based on an error correction model. The results indicate that saving and investment are integrated of order one. Furthermore, cointegration tests show that the two series share a long-run equilibrium association in the six countries, and therefore lend support to the Feldstein-Horioka conclusion that long-term capital is not mobile internationally. The causality tests indicate a unidirectional causality from saving to investment in Ghana, Ivory Coast, Kenya, Nigeria, and Zambia, and a bidirectional causality for South Africa. These results have important policy implications, especially for these and other small open economies where increases in domestic saving will not necessarily translate into higher domestic investment.
Volume (Year): 5 (2002)
Issue (Month): 2 ()
|Contact details of provider:|| Web page: http://www.jadafea.com/|
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:afe:journl:v:5:y:2002:i:2:p:1-19. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mwangi wa Githinji)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.