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Saving, investment and capital mobility in African countries
Journal of African Economies (2007)
  • John Thornton
  • Olumuyiwa S Adedeji
Recently developed panel co-integration techniques are applied to data for six African countries to test the Feldstein–Horioka approach to measuring capital mobility. The results suggest three conclusions: savings and investment in panel data are non-stationary series and they are co-integrated; capital was relatively mobile in the African countries during 1970–2000, with estimated savings–retention ratios of 0.73 (FMOLS), 0.45 (DOLS), 0.51 (DOLS with heterogeneity) and 0.39 (DOLS with cross-sectional dependence effects); and there was a marked drop in the savings–retention ratio from 1970–85 to 1986–2000. The results could be interpreted as indicating that capital mobility in African countries has increased, reflecting the implementation of market-orientated reforms, including the privatisation and rationalisation of the public sector, and the partial liberalisation of their exchange rate regimes and financial systems.
  • Saving,
  • investment,
  • capital mobility,
  • Africa
Publication Date
Citation Information
John Thornton and Olumuyiwa S Adedeji. "Saving, investment and capital mobility in African countries" Journal of African Economies Vol. 16 Iss. 3 (2007)
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