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The Effects of Capital Flows on Economic Growth in Senegal

Author

Listed:
  • Samuel Adams

    (Samuel Adams is at the Ghana Institute of Management and Public Administration, School of Public Service and Governance, Accra, Ghana, email: sadamss2000@yahoo.com)

  • Edem Kwame Mensah Klobodu

    (Edem Kwame Mensah Klobodu is at the Ghana Institute of Management and Public Administration, Business School, Accra, Ghana, email: kmensah2011@gmail.com)

  • Richmond Odartey Lamptey

    (Richmond Odartey Lamptey is at the Open University Business School, Michael Young Building, Milton Keynes, UK, email: richmond.lamptey@open.ac.uk)

Abstract

This article examines the effects of capital flows on economic growth in Senegal using autoregressive distributed lag (ARDL) over the period 1970–2014. Overall, our results show that remittances cause economic growth in Senegal in the long run. In contrast, external debt has a negative impact on economic growth. The ARDL results, however, show no cointegration between aid and growth or between foreign direct investment (FDI) and growth. The Quandt–Andrews breakpoint test selects year 1991 as the most likely breakpoint location for the remittances–growth equation. Finally, time-varying parameter analyses using the year 1991 as a slope dummy reveal that remittances have been growth-enhancing post-1991. Therefore, government and policy makers in Senegal must create a favourable atmosphere for attracting more remittances to promote economic development. JEL: F21, F24, F35, F34, O10

Suggested Citation

  • Samuel Adams & Edem Kwame Mensah Klobodu & Richmond Odartey Lamptey, 2017. "The Effects of Capital Flows on Economic Growth in Senegal," Margin: The Journal of Applied Economic Research, National Council of Applied Economic Research, vol. 11(2), pages 121-142, May.
    • Handle: RePEc:sae:mareco:v:11:y:2017:i:2:p:121-142
    DOI: 10.1177/0973801016687869
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    References listed on IDEAS

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    3. Sayef Bakari & Mohamed Mabrouki & Asma Elmakki, 2018. "The Impact of Domestic Investment in the Industrial Sector on Economic Growth with Partial Openness: Evidence from Tunisia," Economics Bulletin, AccessEcon, vol. 38(1), pages 111-128.
    4. Bakari, Sayef, 2017. "Why is South Africa Still a Developing Country?," MPRA Paper 80763, University Library of Munich, Germany.

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    More about this item

    Keywords

    Capital Flows; Economic Growth; Autoregressive Distributed Lags; Granger Causality Test; Africa; Senegal;
    All these keywords.

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F24 - International Economics - - International Factor Movements and International Business - - - Remittances
    • F35 - International Economics - - International Finance - - - Foreign Aid
    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General

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