The Role of Official Development Assistance and Private Capital Flows in Sub-Saharan African Structural Change: A time series analysis

Abstract: External financial flows geared towards Sub-Saharan Africa have provided new financing for investment opportunities, beyond the resources that are scarcely available domestically. Within the greater context of structural transformation in today’s globalized world, this thesis studied the dynamic effects of Official Development Assistance (ODA) and private capital flows on structural change in Sub-Saharan Africa using Vector Autoregressive and Vector Error Correction models. Using combinations of productivity and employment data on eight Sub-Saharan African countries for the period 1977-2016, it is shown that private capital flows have a tendency to spur structural change in the short run, whereas Official Development Assistance spurs structural change over longer time frames.