The
purpose of this study is to provide an empirical analysis of some of
the impacts of international financial integration on economic activity
and macro-economic volatility in African countries. The results of
empirical analysis show that the impact of external capital flows on
growth seems to depend mainly on the initial conditions and policies
implemented to stabilize foreign investment, increase domestic
investment, productivity and trade, develop the domestic financial
system, expand trade openness and other actions aimed at stimulating
growth and reducing poverty. The analysis also shows that financial
instability was particularly severe as from the nineties. The
instability was more pronounced in the case of portfolio investments
than in foreign direct investments because of the longer-term
relationship established by the latter.
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