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Capital flows and the distribution of income in sub-Saharan Africa

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  • Adams, Samuel
  • Klobodu, Edem Kwame Mensah

Abstract

In this study, we examine the differential effects of capital flows on the distribution of income in 21 sub-Saharan African (SSA) countries over the period 1984–2013. The empirical results show that FDI has a moderate positive effect on income inequality, which suggests that FDI increases income inequality in both the short and the long-run. Remittances, external debt and aid flows, however, do not have robust impact on income inequality. Further, our findings indicate unidirectional causality from FDI to income inequality in the short-run when we account for heterogeneity. Finally, our country-specific estimates indicate that capital flows have mixed effect on inequality in SSA.

Suggested Citation

  • Adams, Samuel & Klobodu, Edem Kwame Mensah, 2017. "Capital flows and the distribution of income in sub-Saharan Africa," Economic Analysis and Policy, Elsevier, vol. 55(C), pages 169-178.
    • Handle: RePEc:eee:ecanpo:v:55:y:2017:i:c:p:169-178
    DOI: 10.1016/j.eap.2017.05.006
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    7. Asgari, Heshmatolah & Moridian, Ali, 2023. "Investigating the Role of Human Capital and Shadow Economy in the Impact of Natural Resource Rent on Income Inequality with Regime Change (in Persian)," The Journal of Planning and Budgeting (٠صلنامه برنامه ریزی و بودجه), Institute for Management and Planning studies, vol. 28(4), pages 75-110, December.
    8. Ajisafe Rufus Adebayo & Okunade Solomon Oluwaseun, 2020. "International Capital Inflow and Sub-Saharan African Economy: Does Capital Inflow Lead Growth?," Growth, Asian Online Journal Publishing Group, vol. 7(1), pages 26-34.
    9. Ishfaq Hamid & Pabitra Kumar Jena, 2020. "Linear And Non-Linear Granger Casuality Between Foreign Direct Investment And Economic Growth: Evidence From India," Copernican Journal of Finance & Accounting, Uniwersytet Mikolaja Kopernika, vol. 9(2), pages 25-44.
    10. Law, Siong Hook & Naseem, N.A.M. & Lau, Wei Theng & Trinugroho, Irwan, 2020. "Can innovation improve income inequality? Evidence from panel data," Economic Systems, Elsevier, vol. 44(4).
    11. Mondal, Ripon Kumar & Khanam, Rasheda, 2018. "The impacts of international migrants’ remittances on household consumption volatility in developing countries," Economic Analysis and Policy, Elsevier, vol. 59(C), pages 171-187.
    12. Ofori, Isaac K. & Gbolonyo, Emmanuel Y. & Ojong, Nathanael, 2022. "Foreign Direct Investment and Inclusive Green Growth in Africa: Energy Efficiency Contingencies and Thresholds," MPRA Paper 115379, University Library of Munich, Germany, revised 09 Nov 2022.

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