Dearth of private capital flows in Sub-Saharan Africa

Abstract

This paper offers an empirical investigation of dearth of private capital flows to Sub-Saharan Africa in a context where there is a surge in private capital flows to the rest of the developing countries. Using panel data on thirty Sub-Saharan African countries over the time period from 1986 to 1993, we find that the domestic fundamentals play a crucial role in explaining this phenomenon. Our findings also imply that these countries may begin to receive private inflows if they implement structural policy reforms which will strengthen domestic fundamentals.