Pooled Mean Group estimation on international capital mobility in African countries

This paper investigates the relationship between the savings and investment rates for 37 African countries over the period 1970–2006, using the recently developed Pooled Mean Group cointegration technique. Our results show that in the long-run, capital was relatively mobile in African countries, while, in the short-run, coefficients are not significant. However, there are marked differences in ratio retentions between country groups. The savings retention coefficient is higher in civil law countries than in common law countries. Furthermore, our results show that the Feldstein–Horioka coefficient is relatively lower in non-CFA than in CFA countries. These results have some policy implications.

► This paper investigates the relationship between the savings and investment rates. ► We use the recently developed Pooled Mean Group estimator on 37 African countries over the period 1970–2006. ► Our results show that in the long-run, capital was relatively mobile. ► Furthermore, our results show that there are marked differences in savings retention coefficient between country groups.