جریان سرمایه بین المللی و نوسانات سرمایه گذاری در کشورهای منطقه جنوب صحرای آفریقا

The study examines the impact of foreign capital flows on investment volatility in emerging and frontier market economies in sub-Saharan Africa. In particular, the study attempts to answer the question of whether different components of foreign capital inflows explain investment volatility. Theory suggests that increased cross-border capital mobility increases investment volatility due to the possibility of substituting foreign for domestic investments. Empirical literature does not, however, provide any clear evidence in support of this theory. By using the dynamic panel data analysis, this study tests the hypothesis that increased capital flows increases investment volatility and the study established that international capital flows reduce investment volatility.

The increase in international capital flows, accompanied by a series of economic crisis in the past three decades, has given rise to concerns about the impact of the flows on national economies (Reinhart and Rogoff, 2009). This, in turn, has led to an intensive debate, among academics and policymakers, about the impact of international financial integration. An important feature of the ensuing debate is how the increased capital flows affects investment volatility (Calderon and Schmidt-Hebbel, 2008 and Pallage and Robe, 2003). It is hypothesized by Backus et al. (1992), Razin and Rose (1994) and Hirata et al. (2004) that increased cross-border capital flows enhances substitution possibilities between domestic and foreign investments, and hence, increase investment volatility. Razin and Rose, also contend that the impact of international capital mobility on investment volatility depends on the persistence of productivity shocks. Studies, including Razin and Rose (1994), Denizer et al. (2000), Grenade (2004) and Hirata et al. (2004), have examined the impact of international capital flows on investment volatility. However, these studies do not provide any clear evidence on the link between capital flows and investment volatility.

This study looked at the impact of foreign capital flows on investment volatility in emerging and frontier market economies in sub-Saharan Africa using dynamic panel (GMM-IV) estimation strategies. Overall, the study fails to accept the hypothesis that foreign capital exacerbates investment volatility. Foreign direct investment and foreign debt inflows, however, reduce investment volatility in emerging and frontier market economies in sub-Saharan Africa. Other key determinants identified in the study are stability in the domestic financial markets, inflation volatility and the political climate. The results from the study have implications for public policy in sub-Saharan Africa. First, the ability to stabilize growth in investments requires that sub-Saharan African countries implement policies that attract greater inflow of foreign capital. In particular, the results suggest that foreign direct investments and debt inflows complement domestic investments in the emerging ad frontier market economies of sub-Saharan Africa. There need to be policy efforts aimed at achieving a stable macroeconomic and political environment through reductions in inflation volatility and political resolutions for entrenched democracy in governance. Monetary and financial policy measures that ensure stability in the provision of domestic credit to the private sector should also be pursued.