Perceived Financial Risk and Divergence in the Economic Growth of Sub-Saharan African Countries

Bichaka Fayissa, Christian Nsiah and Prathibha V. Joshi

No 200804, Working Papers from Middle Tennessee State University, Department of Economics and Finance

Abstract: Since the 1970’s, countries of the Sub-Saharan African region have experienced slow economic growth and development in comparison to other regions of the world. This paper studies the role of perceived financial risk in explaining the divergence of economic growth among Sub-Saharan African countries by employing regression techniques on panel data for the period of 1984 to 2000. Our findings suggest that higher ratings of a country’s investment environment (used as a proxy for reduced perceived financial risk) tend to make the flow of external funds more accessible to African countries and spur their economic growth.

Keywords: Economic growth; financial risk; foreign direct investment; human capital; physical capital; political rights; openness; panel data. (search for similar items in EconPapers)
JEL-codes: C33 F20 G32 O40 O5 (search for similar items in EconPapers)
Date: 2008-04
New Economics Papers: this item is included in nep-afr and nep-dev
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Persistent link: https://EconPapers.repec.org/RePEc:mts:wpaper:200804

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