Does access to international capital markets affect investment dynamics in Sub-Saharan Africa?

Christian Senga, Danny Cassimon and Thomas Kigabo
Working paper 2019.05

This study investigates the influence of government borrowing through international capital markets on investment dynamics in Sub-Saharan Africa (SSA). We apply the synthetic control method to Gabon, Ghana and Senegal to assess whether this kind of government borrowing affects private, public and FDI in these countries using annual data for the period 1995-2017. Our results suggest that government and private investment have not been affected by governments' borrowing through international capital markets, but that the move may have boosted these countries' capacity to attract foreign direct investment. They lend support to the hypothesis that these countries' exposure to international capital markets is an opportunity to register on the investors' radar.

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