GLOBAL FINANCIAL CRISES AND CAPITAL FLOWS: EVIDENCE FROM WEST AFRICAN MONETARY ZONE (ECONOMICS PROJECT TOPICS AND MATERIALS)
ABSTRACT
The impact of foreign capital inflows on the economic growth of sub-Saharan Africa, with emphasis on West African Monetary Zone, WAMZ member countries was studied using panel Data Regression Models and Hausman Test. Outcomes of the study revealed that there is positive and significant relationship between capital flows and the level of economic growth in West African Monetary Zone. Foreign direct investment (FDI) as capital flows variable has inverse relationship with the economic growth in the region, while other capital flows variables such as foreign private investment (PPI), overseas development Assistance (ODA) and economic Migrant’s remittance are positively and statistically significant in the long run. In conclusion, most of the investment inflows into sub-Saharan- Africa were based on speculations targeted at the non- priority sectors of the economies and channeled into businesses with short gestation periods. Their impact are only felt in the immediate periods and given that the funds are repatriated after profits are made, they do not make desired impact in the long run. The study, therefore, recommends conscious efforts on the economies of West African Monetary Zone (WAMZ) to enact some investor friendly policies that will encourage, attract more capital inflows to provide a conductive and enabling environment. Basic infrastructure like good roads, electricity supply and security must be seen to be adequate. Again, there is a need to plan down on speculative businesses and to invest in the real sectors of the economies. To reduce the level of capital flight inflows should be tied to specific, relevant and purposeful projects. This will help to create employment opportunities in the long-run. Lastly, there is the need for prudence and accountability in the management of accruals from official capital inflows and transfers. Such movies are expected to be channeled into productive ventures by the governments in power and not for profligacy.
