Africa and the World Economy: A Focus on Capital — An Overview
a UN Economic Commission for Africa, b University of Cambridge and c University of Massachusetts
Capital — physical, human or financial — is a vital factor in the growth and development of African economies, especially within the setting of the global economy. The present article provides an overview for three pertinent papers. First, it is observed that capital flight and the brain drain from Africa are persistent and that stemming these outflows requires building appropriate institutions to provide stability and reduce capital risks. Secondly, it is reported that though there is little evidence that opening up capital regimes enhances capital inflows, foreign direct investment (FDI), in particular, increases growth in developing countries, primarily through improvements in total factor productivity. Thirdly, consistent with recent evidence from other countries, private returns to education are found to increase with higher levels of education; it is argued that there is need for redistributive measures in favor of the less well off, both on equity and efficiency grounds.