Calderon, CesarNguyen, Ha2015-07-162015-07-162015-06https://hdl.handle.net/10986/22171This paper examines whether domestic output growth helps attract capital inflows and, in turn, capital inflows help boost output growth in a set of 38 Sub-Saharan African countries. Using a two-step approach to address reverse causality and omitted variable issues, the paper finds that output growth in countries in Sub-Saharan Africa does not attract capital inflows. However, aid and foreign direct investment inflows enhance growth, while sovereign debt inflows do not. A 1 percent increase in the level of real aid inflows raises growth of real output per capita by 0.022 percentage point. For foreign direct investment inflows, the figure is 0.002 percentage point.en-USCC BY 3.0 IGOCAPITAL MARKETSBORROWERFUTURE GROWTHFOREIGN CAPITALECONOMIC GROWTHCONCESSIONAL TERMSSIGNIFICANT EFFECTCOMMODITY EXPORTINTERNATIONAL CAPITALMONETARY ECONOMICSFOREIGN INVESTORSCOUNTRY FIXED EFFECTSECONOMIC LITERATUREINCOMEINTERESTEXCHANGEECONOMIC REVIEWDEVELOPING COUNTRIESPOLITICAL ECONOMYWORLD DEVELOPMENT INDICATORSWELFAREFOREIGN DIRECT INVESTORSPRICEWEALTHDEVELOPING COUNTRYDEVELOPED COUNTRIESECONOMIC ACTIVITYADVANCED COUNTRIESLONG TERMDEVELOPMENT ECONOMICSADVANCED ECONOMIESLOW-INCOME COUNTRIESFOOD PRICEDEBTSINTEREST RATESMONETARY FUNDDEBTFINANCIAL CRISESPER CAPITA GROWTHFINANCIAL FLOWSEXPLANATORY VARIABLESBUSINESS CYCLEPRIVATE CAPITAL FLOWSLOANSPRIVATE CAPITALOUTPUT GROWTHMACROECONOMIC VULNERABILITIESCOMMODITY PRICEINVESTMENT DECISIONSEQUITYDEVELOPMENT RESEARCHGOLD STANDARDINVESTORSSOVEREIGN DEBTHUMAN CAPITALCOUNTRY LEVELECONOMIC PERFORMANCECAPITALVOLATILITYECONOMIC STUDIESFUTUREFOREIGN DIRECT INVESTMENTFOREIGN INVESTMENTPOOR COUNTRIESLEVELS OF CAPITALINCOME COUNTRIESCAPITAL FLOWSINTERNATIONAL CAPITAL FLOWSPRIVATE SECTORSOVEREIGN BORROWINGECONOMICSPUBLIC DEBTOUTPUTGROWTH DEBATEFIXED EFFECTSGOVERNANCEECONOMIC DEVELOPMENTTRADESOVEREIGN DEBTSINTERESTSGROWTH RESIDUALSACCESS TO CAPITAL MARKETSFINANCIAL DEVELOPMENTGROWTH RESIDUALFINANCIAL MARKETINTERNATIONAL FINANCIAL MARKETCROSS-COUNTRY EVIDENCEINVESTMENTGROWTH REGRESSIONSNEOCLASSICAL MODELSSHARENEOCLASSICAL MODELFINANCIAL MARKETSREAL OUTPUTCAPITAL INFLOWSEXTERNAL DEBTCONSUMER PRICE INDEXCAPITAL FLOWINCREASE GROWTHPOLICY RESEARCHFOREIGN BORROWINGMACROECONOMIC POLICIESGROWTH MEANSPRICE INDEXCOMMODITY PRICESCOUNTRY SPECIFICCOMMODITYDEVELOPMENT INDICATORSPRICESLEVEL OF CAPITALDEVELOPMENT POLICYGROWTHWorking PaperWorld Bankhttps://doi.org/10.1596/1813-9450-7298