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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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