Title: Stock Markets, Development Indicators and Investment in Sub-Saharan Africa
Abstract: By most measures, Sub-Sahara Africa (SSA) has the lowest level of socio eco nomic development in the world. Many governments in Africa are keen to increase the flow of investment into their economies. As a result, over the last two decades or so, the establishment of stock markets in SSA has been a key aspect of policy. This paper examines the relationship between socio-economic development and the effectiveness of stock markets in mobilizing investment in Africa. Our analysis con firms the fact that in a number of countries the development of stock markets in SSA has not led to a noticeable increase in real sector investment. To augment this point, we illustrate that clearly stock markets in the Group of Seven (G7) countries have been successful in promoting investment. The large difference between the socio economic and infrastructure indicators in SSA and the developed economies leads to the conclusion that stock markets in and of themselves are not sufficient for fos tering investment. A relevant policy implication is that instead of establishing more stock exchanges, SS/ should concentrate on improving socio-economic and devel opment indicators. Such actions are more likely to foster investment, improve eco nomic growth, create jobs and reduce poverty. JEL Classification: G15, 016, N47
Publication Year: 2006
Publication Date: 2006-01-01
Language: en
Type: article
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Cited By Count: 2
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