The Effects of Capital Flows on Economic Growth in Senegal

Samuel Adams, Edem Kwame Mensah Klobodu and Richmond Odartey Lamptey
Additional contact information
Samuel Adams: Samuel Adams is at the Ghana Institute of Management and Public Administration, School of Public Service and Governance, Accra, Ghana, email: sadamss2000@yahoo.com
Edem Kwame Mensah Klobodu: Edem Kwame Mensah Klobodu is at the Ghana Institute of Management and Public Administration, Business School, Accra, Ghana, email: kmensah2011@gmail.com
Richmond Odartey Lamptey: Richmond Odartey Lamptey is at the Open University Business School, Michael Young Building, Milton Keynes, UK, email: richmond.lamptey@open.ac.uk

Margin: The Journal of Applied Economic Research, 2017, vol. 11, issue 2, 121-142

Abstract: This article examines the effects of capital flows on economic growth in Senegal using autoregressive distributed lag (ARDL) over the period 1970–2014. Overall, our results show that remittances cause economic growth in Senegal in the long run. In contrast, external debt has a negative impact on economic growth. The ARDL results, however, show no cointegration between aid and growth or between foreign direct investment (FDI) and growth. The Quandt–Andrews breakpoint test selects year 1991 as the most likely breakpoint location for the remittances–growth equation. Finally, time-varying parameter analyses using the year 1991 as a slope dummy reveal that remittances have been growth-enhancing post-1991. Therefore, government and policy makers in Senegal must create a favourable atmosphere for attracting more remittances to promote economic development. JEL: F21, F24, F35, F34, O10

Keywords: Capital Flows; Economic Growth; Autoregressive Distributed Lags; Granger Causality Test; Africa; Senegal (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:sae:mareco:v:11:y:2017:i:2:p:121-142

DOI: 10.1177/0973801016687869

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