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Capital Flows to Africa: An Analysis of the Structure of Official and Private Capital Flows

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  • Mhlanga, Nomathemba
  • Christy, Ralph D.

Abstract

Although globalization was built on increased world trade, the movement of capital has accelerated faster in the past two decades. It is this free flow of capital that is offering African countries renewed hope of tapping global markets for the much needed resources to aid their economic growth while becoming fully integrated into the global economy. While past studies tackling external resource flows to Africa have focused on either official or private capital flows, this paper analyses both types of capital flows with the intention of providing a clearer picture on composition and magnitude of external resources to Africa. Three types of capital flows – Official Development Assistance (ODA), Foreign Direct Investment (FDI) and Workers Remittances – emerge as key to tackling Africa’s development problems. Together, these flows account for the bulk of resources to Africa. In addition, they have built-in advantages for economic development hence are more suited to addressing Africa’s growth challenges. To this end, African countries must enact policies that directly relate to aiding effectiveness of these flows.

Suggested Citation

  • Mhlanga, Nomathemba & Christy, Ralph D., 2006. "Capital Flows to Africa: An Analysis of the Structure of Official and Private Capital Flows," Working Papers 127057, Cornell University, Department of Applied Economics and Management.
    • Handle: RePEc:ags:cudawp:127057
    DOI: 10.22004/ag.econ.127057
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    File URL: https://ageconsearch.umn.edu/record/127057/files/Cornell_Dyson_wp0619.pdf
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    References listed on IDEAS

    as
    1. Dave Weatherspoon & Joyce Cacho & Ralph Christy, 2004. "Linking Globalization, Economic Growth and Poverty: Impacts of Agribusiness Strategies on Sub-Saharan Africa," World Scientific Book Chapters, in: Ralph D Christy (ed.), Achieving Sustainable Communities In A Global Economy Alternative Private Strategies and Public Policies, chapter 2, pages 27-42, World Scientific Publishing Co. Pte. Ltd..
    2. White, Howard, 2004. "Trends in the volume and allocation of official flows from donor countries," International Review of Economics & Finance, Elsevier, vol. 13(3), pages 233-244.
    3. Ali, A A G & Malwanda, C & Suliman, Y, 1999. "Official Development Assistance to Africa: An Overview," Journal of African Economies, Centre for the Study of African Economies, vol. 8(4), pages 504-527, December.
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    Cited by:

    1. Oluwatosin Olatunji Ogunyomi-Oluyomi & Adeyemi Olayiwola Babasanya & Isiaq Olasunkanmi Oseni, 2023. "Interactive Effect Of Foreign Direct Investment (Fdi) Inflow And Absorptive Capacity On Economic Growth In The African Countries," Business & Management Compass, University of Economics Varna, issue 4, pages 267-285.
    2. Edem Kwame Mensah Klobodu & Samuel Adams, 2016. "Capital Flows and Economic Growth in Ghana," Journal of African Business, Taylor & Francis Journals, vol. 17(3), pages 291-307, September.

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