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Private Capital Flows, Real Sector Growth and Institutional Quality in Africa
Author(s) -
Asamoah Michael Effah,
Alagidede Imhotep Paul,
Adu Frank
Publication year - 2021
Publication title -
journal of international development
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.533
H-Index - 66
eISSN - 1099-1328
pISSN - 0954-1748
DOI - 10.1002/jid.3518
Subject(s) - private sector , foreign direct investment , economics , capital flows , capital (architecture) , monetary economics , business , macroeconomics , market economy , economic growth , geography , liberalization , archaeology
The article examines the interconnections between capital flows, institutions and real sector growth in Africa. We show that capital flows (foreign direct investment, private debt and equity) have no direct favourable impact on the real sector. Initial assessments show that countries with robust institutional frameworks can benefit significantly from capital flows, as institutions moderate the positive impact of capital flows on real sector growth. Our marginal effect analyses show that the impact of private capital on real sector components is dependent on the type of capital, sector and the percentile level on institutions, in some cases, at the 90th percentile. © 2020 John Wiley & Sons, Ltd.