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Does access to international capital markets affect investment dynamics in Sub-Saharan Africa?

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  • Senga, Christian
  • Cassimon, Danny
  • Kigabo, Thomas

Abstract

This study investigates the influence of government borrowing through international capital markets on investment dynamics in Sub-Saharan Africa (SSA). We apply the synthetic control method to Gabon, Ghana and Senegal to assess whether this kind of government borrowing affects private, public and FDI in these countries using annual data for the period 1995-2017. Our results suggest that government and private investment have not been affected by governments’ borrowing through international capital markets, but that the move may have boosted these countries’ capacity to attract foreign direct investment. They lend support to the hypothesis that these countries’ exposure to international capital markets is an opportunity to register on the investors’ radar.

Suggested Citation

  • Senga, Christian & Cassimon, Danny & Kigabo, Thomas, 2019. "Does access to international capital markets affect investment dynamics in Sub-Saharan Africa?," IOB Working Papers 2019.05, Universiteit Antwerpen, Institute of Development Policy (IOB).
    • Handle: RePEc:iob:wpaper:201905
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    Keywords

    Sub-Saharan Africa; investment; synthetic control method;
    All these keywords.

    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • O55 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Africa

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