Exploring the nature, motives, and implications of foreign capital in Africa

Evelyn F. Wamboye, Bruno S. Sergi

Research output: Contribution to journalArticle

Abstract

Africa, like many developing regions, has long suffered from savings and foreign exchange gaps. This has contributed to its low rate of capital accumulation, and lagging development. In search of ways to boost the domestic capital stock, a number of scholars have recommended increasing financial flow from external sources. For example, some scholars have advocated for a reasonable and sustained flow of development aid in order to help these countries meet and surpass that threshold necessary for the takeoff into self-sustained growth. Others have embraced the debt relief programs as an additional policy tool for tackling the poverty problem in these countries and consequently, increasing the domestic savings rate. Moreover, proponents of the free market system have strongly pushed for integrating Africa into the global financial system in order to attract foreign direct investment (FDI) and other portfolio-type investments. In some countries in the region, such efforts have only resulted into greater volatility, with consequences for exchange rate instability and capital outflows. It is against the aforementioned that this paper evaluates the influence of foreign capital in Africa. Its novel contribution lies in its multifaceted analysis and exploring some of the nuances that are often ignored in the traditional econometric analysis.

Original languageEnglish (US)
Article number100108
JournalWorld Development Perspectives
Volume14
DOIs
StatePublished - Jun 1 2019

Fingerprint

savings
debt relief
development aid
capital accumulation
foreign exchange
financial system
market system
direct investment
foreign investment
econometrics
foreign direct investment
debt
exchange rate
poverty
relief
outflow
market
Africa
Nature
Foreign capital

All Science Journal Classification (ASJC) codes

  • Geography, Planning and Development
  • Development
  • Sociology and Political Science
  • Economics and Econometrics

Cite this

@article{28c87ff1db564ab4b9b826ab5193c92e,
title = "Exploring the nature, motives, and implications of foreign capital in Africa",
abstract = "Africa, like many developing regions, has long suffered from savings and foreign exchange gaps. This has contributed to its low rate of capital accumulation, and lagging development. In search of ways to boost the domestic capital stock, a number of scholars have recommended increasing financial flow from external sources. For example, some scholars have advocated for a reasonable and sustained flow of development aid in order to help these countries meet and surpass that threshold necessary for the takeoff into self-sustained growth. Others have embraced the debt relief programs as an additional policy tool for tackling the poverty problem in these countries and consequently, increasing the domestic savings rate. Moreover, proponents of the free market system have strongly pushed for integrating Africa into the global financial system in order to attract foreign direct investment (FDI) and other portfolio-type investments. In some countries in the region, such efforts have only resulted into greater volatility, with consequences for exchange rate instability and capital outflows. It is against the aforementioned that this paper evaluates the influence of foreign capital in Africa. Its novel contribution lies in its multifaceted analysis and exploring some of the nuances that are often ignored in the traditional econometric analysis.",
author = "Wamboye, {Evelyn F.} and Sergi, {Bruno S.}",
year = "2019",
month = "6",
day = "1",
doi = "10.1016/j.wdp.2019.02.019",
language = "English (US)",
volume = "14",
journal = "World Development Perspectives",
issn = "2452-2929",
publisher = "Elsevier Limited",

}

Exploring the nature, motives, and implications of foreign capital in Africa. / Wamboye, Evelyn F.; Sergi, Bruno S.

In: World Development Perspectives, Vol. 14, 100108, 01.06.2019.

Research output: Contribution to journalArticle

TY - JOUR

T1 - Exploring the nature, motives, and implications of foreign capital in Africa

AU - Wamboye, Evelyn F.

AU - Sergi, Bruno S.

PY - 2019/6/1

Y1 - 2019/6/1

N2 - Africa, like many developing regions, has long suffered from savings and foreign exchange gaps. This has contributed to its low rate of capital accumulation, and lagging development. In search of ways to boost the domestic capital stock, a number of scholars have recommended increasing financial flow from external sources. For example, some scholars have advocated for a reasonable and sustained flow of development aid in order to help these countries meet and surpass that threshold necessary for the takeoff into self-sustained growth. Others have embraced the debt relief programs as an additional policy tool for tackling the poverty problem in these countries and consequently, increasing the domestic savings rate. Moreover, proponents of the free market system have strongly pushed for integrating Africa into the global financial system in order to attract foreign direct investment (FDI) and other portfolio-type investments. In some countries in the region, such efforts have only resulted into greater volatility, with consequences for exchange rate instability and capital outflows. It is against the aforementioned that this paper evaluates the influence of foreign capital in Africa. Its novel contribution lies in its multifaceted analysis and exploring some of the nuances that are often ignored in the traditional econometric analysis.

AB - Africa, like many developing regions, has long suffered from savings and foreign exchange gaps. This has contributed to its low rate of capital accumulation, and lagging development. In search of ways to boost the domestic capital stock, a number of scholars have recommended increasing financial flow from external sources. For example, some scholars have advocated for a reasonable and sustained flow of development aid in order to help these countries meet and surpass that threshold necessary for the takeoff into self-sustained growth. Others have embraced the debt relief programs as an additional policy tool for tackling the poverty problem in these countries and consequently, increasing the domestic savings rate. Moreover, proponents of the free market system have strongly pushed for integrating Africa into the global financial system in order to attract foreign direct investment (FDI) and other portfolio-type investments. In some countries in the region, such efforts have only resulted into greater volatility, with consequences for exchange rate instability and capital outflows. It is against the aforementioned that this paper evaluates the influence of foreign capital in Africa. Its novel contribution lies in its multifaceted analysis and exploring some of the nuances that are often ignored in the traditional econometric analysis.

UR - http://www.scopus.com/inward/record.url?scp=85061426938&partnerID=8YFLogxK

UR - http://www.scopus.com/inward/citedby.url?scp=85061426938&partnerID=8YFLogxK

U2 - 10.1016/j.wdp.2019.02.019

DO - 10.1016/j.wdp.2019.02.019

M3 - Article

AN - SCOPUS:85061426938

VL - 14

JO - World Development Perspectives

JF - World Development Perspectives

SN - 2452-2929

M1 - 100108

ER -