The impact of capital account liberalization on economic growth

Abstract

The study analyzes the influence of capital account deregulation on economic growth in five Sub-Saharan African (SSA) Countries from 1984 to 2019. In order to remedy the problem of heteroscedasticity and serial correlation, the study utilizes Pooled Mean Group technique (PMG). Evidence indicates that capital account deregulation and credit to private sector by banks (CPSB) retard economic growth. Furthermore, evidence suggests that capital stock, foreign direct investment (FDI) and labour force participation stimulate economic growth. Therefore, the study recommends that countries should implement policies geared toward supporting and enhancing the performance of capital account deregulation. Hence, to benefit from the numerous advantages of capital account deregulation, the study suggests that member countries must provide a conducive environment for businesses to succeed.