Does Access to International Capital Markets Affect Investment Dynamics in Sub-Saharan Africa?

This study investigates the influence of government borrowing through international capital markets on investment dynamics in Sub-Saharan Africa (SSA). We apply the synthetic control method to Gabon, Ghana and Senegal to assess whether this kind of government borrowing affects public and private investment, and FDI in these countries using annual data for the period 1995-2017. Our results suggest that government borrowings through international capital markets have not affected public and private investment, but that the move may have boosted these countries' capacity to attract FDI. These results lend support to the hypothesis that these countries' exposure to international capital markets constitutes an opportunity to register on the investors' radar.