The impact of foreign financial inflows on the economic growth of sub-Saharan African countries: An empirical approach

Figures & data

Figure 1. Financial inflows to SSA (2009–2019).

Source: world development indicator database, World Bank¹

Table 1. Variable description and their measurement

Variables	Description	Measurement	Expected sign
GDPPGR	GDP per capita growth rate	%
REM	Remittance inflows	% of GDP	±
FDI	Net foreign direct investment inflows	% of GDP	+
ODA	Net official development assistance received	% of GNI	±
ED	External debt	% of GNI	±
GFCF	Gross fixed capital formation	% of GDP	+
INF	Inflation	%	-
TOP	Trade openness	% of GDP	+
POP	Population growth	%	±

Source: Author

Table 2. Descriptive statistics

Variables	Obs	Mean	Std. Dev.	Min	Max
GDPPGR	341	1.781637	3.341752	−22.3121	18.05331
REM	341	3.838442	5.084404	0	31.47492
FDI	341	4.889055	10.29076	−6.369877	103.3374
ODA	341	7.391513	7.527496	.0604877	77.86814
ED	341	32.5054	20.37783	4.950817	141.9754
GFCF	341	22.24879	7.126161	5.885067	52.41832
INF	341	6.907847	7.842286	−3.233389	63.29251
TOP	341	66.32581	27.40568	16.14108	158.9001
POP	341	2.622585	.7128962	.1511089	3.974067

Source: Author’s computation

Table 3. Correlation matrix

	GDPPGR	REM	FDI	ODA	ED	GFCF	INF	TOP	POP
GDPPGR	1
REM	−0.0480	1
FDI	0.141	0.247	1
ODA	−0.0249	0.299	0.535	1
ED	−0.112	−0.0303	0.106	0.166	1
GFCF	0.106	−0.0165	0.128	−0.174	0.0595	1
INF	−0.0786	−0.0953	0.0133	−0.0122	0.170	−0.0833	1
TOP	0.0371	0.468	0.334	0.148	0.128	0.289	−0.0783	1
POP	−0.0360	−0.309	0.0971	0.211	0.0658	0.128	−0.0232	−0.420	1

Source: Author’s computation

Table 4. Estimation results

Dependent variable: GDPPGR
Variables	One-step system GMM	Two-step system GMM
L.GDPPGR	0.236***	0.259***
	(0.0492)	(0.0369)
REM	−0.0368	−0.0289
	(0.0507)	(0.0311)
FDI	0.0526***	0.0483***
	(0.0141)	(0.00862)
ODA	−0.0553*	−0.0547**
	(0.0308)	(0.0250)
ED	−0.0201**	−0.0231***
	(0.00836)	(0.00593)
GFCF	0.0806**	0.0887***
	(0.0375)	(0.0214)
INF	−0.0415	−0.0407**
	(0.0286)	(0.0175)
TOP	0.000256	0.00359
	(0.0136)	(0.00726)
POP	−0.418	−0.192
	(0.388)	(0.256)
Year dummies	Yes	Yes
Observations	310	310
Number of countries	31	31
Number of instruments	28	28
P-value of AR(1)	0.007	0.006
P-value of AR(2)	0.340	0.384
P-value of Sargan	0.360	0.360

Robust standard errors in parentheses

Note: *** p < 0.01, ** p < 0.05, * p < 0.1 indicates 1%, 5% and 10% significance level respectively.

Source: Author’s computation