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Enhancing Economic Growth Impact of Financial Development and Human Capital through Capital Flows in Sub-Saharan Africa

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  • Mutiu Abimbola Oyinlola and Abdulfatai Adekunle Adedeji

    (University of Ibadan, Nigeria)

Abstract

This paper investigated the role of capital flows in shaping the relationship among financial development, human capital and economic growth in selected sub-Saharan African (SSA) countries. This study examined two different forms of capital flows; portfolio equity and foreign direct investment, and their influences on the linkages of financial development, human capital, and growth. We deployed data on eleven SSA countries covering the period between 1999 and 2014 using difference generalized method of moments. Human capital has a direct positive impact on growth only when measured in terms of its efficiency, irrespective of the measures of financial development and capital flows. We obtained mixed results on introducing capital flows irrespective of the choice of financial development and human capital measures; positive and negative impacts almost equally dominated the results albeit largely statistically insignificant and negligible coefficients. Overall, capital flows, especially, foreign direct investment dampens growth through the financial development and human capital.

Suggested Citation

  • Mutiu Abimbola Oyinlola and Abdulfatai Adekunle Adedeji, 2020. "Enhancing Economic Growth Impact of Financial Development and Human Capital through Capital Flows in Sub-Saharan Africa," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 45(2), pages 95-114, June.
    • Handle: RePEc:jed:journl:v:45:y:2020:i:2:p:95-114
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    1. Oyinlola, Mutiu A. & Adedeji, Abdulfatai A. & Onitekun, Olumide, 2021. "Human capital, innovation, and inclusive growth in sub-Saharan African Region," Economic Analysis and Policy, Elsevier, vol. 72(C), pages 609-625.

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    More about this item

    Keywords

    Human Capital; Capital Flows; Financial Development; Economic Growth; SSA;
    All these keywords.

    JEL classification:

    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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