The Impact of Capital and Financial Flows on Human Welfare in Sub-Saharan Africa
In the last few decades, the world has become more linked owing to the increased intensity of globalisation across regions. Sub-Saharan African (SSA) has become relatively more integrated into global economy most especially in terms of capital and financial flow (foreign direct investment increased from 0.3% in 1980-84 to 2.74% in 2000 – 2012). Over the same period, the quality of life in terms of the proportion of SSA people that have access to basic necessities improved marginally (from 49% in 1980-1990 to 53% in 2000-2012 for water, 61% in 1980-1990 to 62% in 2000-2012 for health care services). The endogeneous growth theory provided the theoretical framework for this study. Financial flow is captured by the foreign investment while the capital flow is proxied by the Portfolio investment. The human welfare was proxied by human development index, (HDI-a composite of three indicators: life expectancy at birth, mean year of schooling and income per head), access to basic necessities such as water, sanitation and health services were also used as alternative measure of human welfare while Governance index (GI) was considered as a control variable which stimulates globalisation and human welfare. The feasible Generalised Least Square (GLS) estimator was utilised to estimate the fixed and random effect panel regression models. Hausman test was used to determine the efficient estimator between fixed and random effects. All estimated coefficients were estimated at 1% level of significance. The panel consisted of sixteen countries selected from the four regional groups in SSA. The results revealed that foreign direct investment significantly increased HDI (0.59), infant mortality rate (-2.19), life expectancy (0.32), mean year of schooling (0.01), access to water (0.68) access to sanitation (0.27), and access to health services (0.54). The Portfolio investment was found to influence HDI access to health services and life expectancy at birth negatively but improved access
