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Abstract
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Purpose- Nowadays, foreign capital inflow (FCI) is considered as a catalyst for economic development and an important source of transferring technology and foreign exchange earnings from developed to developing countries. The purpose of this paper is to study firstly, the impact of different forms of foreign capital inflows namely foreign direct investment (FDI), personal remittances (PR), and official development assistant (ODA) on economic growth on 26 top African countries; secondly, which of them is more effective on economic growth of the studied countries. The results of this paper are very important for host governments’ policy and help them to design their economic plans to absorb the suitable foreign inflow. Design/methodology/approach- The paper uses Pooled Mean Group (PMG) estimation of dynamic heterogeneous panels to estimate the impact of FDI, PR, ODA and some complementary variables in long and short –run over the period 1992-2016. Findings- The results of the study show that all three forms of foreign capital inflows have positive and significant effects on economic growth in the long and short -run. However, the personal remittances had the most impact on economic growth in the long and short- run. Research Limitation/Implications- In this paper, the impact of FCI on economic growth of top 26 African countries is studied; the data of the rest of African countries were inaccessible. Practical Implications-First, it is compared the effect of different foreign capital inflows on economic growth in 26 top African countries. Second, it is shown which impact of different foreign capital –namely: FDI, PR, and ODA- is more effective on economic growth of studied African countries. The study suggests that the governments should design and implement appropriate fiscal, monetary and trade policies to make and improve an enabling environment to attract foreign capital inflows as a supplementary source of domestic investment. Originality/Value- The most of previo
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