Financing Domestic Investment in African Countries: Does the Source of Financing Matter?

Leonce Ndikumana () and Theresa Mannah-Blankson
Additional contact information
Leonce Ndikumana: Department of Economics and Political Economy Research Institute at the University of Massachusetts at Amherst

Journal of African Development, 2015, vol. 17, issue 2, 19-48

Abstract: This paper aims to investigate the effects of various sources of financing on domestic investment in African countries. Domestic savings and credit to the private sector prove to be the most robust sources of financing for domestic investment. While foreign direct investment also has a positive effect on domestic investment, the magnitude is relatively smaller. Official development aid, public external debt and migrant remittances have no significant effect on domestic investment. The evidence in the study has a powerful policy implication: in their efforts to boost domestic investment, African countries are should primarily look inward. Improving the environment for financial intermediation and domestic savings mobilization appears to be a more promising route to finding a key to stimulating domestic investment than relying on imported investment capital.

Keywords: Africa; domestic investment; domestic savings; bank credit; official development aid; external debt; migrant remittances (search for similar items in EconPapers)
JEL-codes: E21 E22 F34 F35 G20 O16 O55 (search for similar items in EconPapers)
Date: 2015
References: Add references at CitEc
Citations: View citations in EconPapers (20)

Downloads: (external link)
http://www.afeawpapers.org/RePEc/afe/afe-journl/wp ... /JAD_vol17-2_ch2.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:afe:journl:v:17:y:2015:i:2:p:19-48

Access Statistics for this article

More articles in Journal of African Development from African Finance and Economic Association (AFEA) Contact information at EDIRC.
Bibliographic data for series maintained by Christian Nsiah ().