1. Sectoral capital flows and economic growth: What do we know about the dynamics?
Judith Tyson, ODI
Victor Murinde, University of Birmingham
ESRC Reference: ES/N013344/1: Delivering Inclusive Financial Development and Growth
Research Project Workshop
SOAS University of London 3rd – 4th March, 2017

2. Introduction & Motivation
Important to understanding the relationship of capital flows & growth
Current literature examines flows by source (FDI, portfolio, bank lending) and shows considerable variances across countries & periods - it is not fully understood what are the intermediating variables
The study will look at whether sectors receiving flows are a differentiating factor in growth impact
It will comprise a literature review & empirical work
Empirical work will include (i) regression analysis against measures of GDP growth, productivity and poverty levels; and (ii) comparative country analysis

3. Empirical work will use a new database of capital flows by sector
All types of private capital flows
International - FDI, portfolio (bonds and equity) and bank lending
Domestic – bank lending, bond and equity
Capital markets primary issuances
Data
Multiple sources e.g. Central banks, national statistics, national investment authorities, stock exchanges, research papers
Reconciled to the World Bank Development Database totals
10 years from 2006 to 2015
Gaps to be addressed (i) some 2015 data not yet published; (ii) some weaknesses in FDI by sector data
Excludes self-funded investments & short term government lending (e.g. Treasury bills)

4. 16 sample countries – Sample is all SSA excluding fragile states, small states, offshore financial centers and those without adequate data. Shaded countries have been completed and others in progress.
SAMPLE
PPP USD
GDP ( current US$)
Fragile state*
No data/poor data
Small state*
Total sample
Guinea
GIN
1,120
6,699,203,543 1 -
Malawi
MWI
1,140
6,565,382,259
Mozambique
MOZ
1,170
14,688,606,238
Togo
TGO
1,320
4,002,723,817
Madagascar
MDG
1,400
9,980,522,718
Comoros
COM
1,430 ..
Guinea-Bissau
GNB
1,450
1,056,851,008
Sierra Leone
SLE
1,560
4,474,689,706
Liberia
Gambia, The
GMB
1,580
Ethiopia
ETH
1,620
61,537,143,095
South Sudan
SSD
1,630
9,015,221,096
Burkina Faso
BFA
1,640
11,099,473,097
Zimbabwe
ZWE
1,700
13,892,940,504
Rwanda
RWA
1,720
8,095,980,014
Uganda
UGA
1,780
26,369,242,278
Benin
BEN
2,100
8,476,125,181
Chad
TCD
2,110
10,888,798,114
Mali
MLI
2,360
13,100,263,697
Senegal
SEN
2,390
13,779,570,706
Tanzania
TZA
2,620
44,895,392,077
Kenya
KEN
3,060
63,398,041,540
Cameroon
CMR
3,080
29,198,372,811
Lesotho
LSO
3,160
São Tomé and Principe
STP
Côte d'Ivoire
CIV
3,240
31,752,543,539
Zambia
ZMB
3,660
21,201,564,248
Ghana
GHA
4,070
37,864,368,220
Nigeria
NGA
5,800
481,066,152,870
Congo, Rep.
COG
6,300
8,553,154,506
Cabo Verde
CPV
6,390
1,629,759,975
Angola
AGO
6,450
102,643,104,696
Swaziland
SWZ
8,040
4,060,072,444
Namibia
NAM
10,380
11,546,088,223
Botswana
BWA
15,600
14,390,863,395
Equatorial Guinea
GNQ
16,450
9,397,792,253
Gabon
GAB
18,810
14,339,723,935
Mauritius
MUS
19,290
11,510,952,257
Seychelles
SYC
25,760
1,437,722,206
TOTAL 10 8 5 16

5. An example of the actual database for Nigeria
An example of the actual database for Nigeria. Includes a 4 and a 9 sector analysis as well as by source
1. Field for source i.e. FDI, bank lending, portfolio ; plus domestic vs international
Data fields
Sources include Central Bank of Nigeria, World Economic Forum, World Bank Development Database (Including reconciling to total flows by category from the WBDD), Nigerian Stock Exchange, London Stock Exchange, Euromoney database
2. Field for 4 sectors i.e. firm, household, government and other
3. Field for 9 sectors i.e. more detailed firm level capital flows

6. Example of a database query: Regional capital stock by sector
TOTAL FINANCING STOCK BY SECTOR

7. We can also use the database for more detailed analysis by sector or country An example by country for Nigeria: (i) Capital stock by sector

8. And for Nigeria (ii) Capital stock by source

9. An example by sector : Manufacturing (i) total flows relative to GDP as as a percent of stock…
Note: These are from a working draft on financing for manufacturing

10. … (ii) the sources of manufacturing financing

11. … and (iii) which countries have been the recipients

12. Next steps Complete the database including 2015 data
Prepare the regression analysis
Working papers on sectors and comparative country analysis in preparation