Abstract:
The paper estimate an augmented endogenous economic growth model to investigates the extent to which capital flight affects the impact of external debt on economic growth in selected sub-Saharan African countries. The estimations was done with the aid of a dynamic system generalized method of moments technique with data from 2000 to 2015. The direct impact of both capital flight and external debt as well as their combined effect on economic growth was found to be negative and statistically significant. Additionally, the marginal effects results show that a low level of capital flight has no noticeable effect on the negative impact of external debt on economic growth. In contrast, a high incidence of capital flight exacerbates the negative impact of external debt on economic growth. Based on the findings, we conclude that efforts to promote efficient external debt management should focus on reducing capital flight in sub-Saharan African.
