Abstract

This study uses country-level panel data to investigate the impact of short-term foreign capital flows on the Gross Domestic Product (GDP) per capita in nineteen member countries of the Common Market for Eastern and Southern Africa region (COMESA) region over the 2000-2014 period. The estimates are generated using the one-step Generalized Method of Moments (GMM)-difference estimator. The study found that short-term foreign capital flows and absorptive capacity exerted a significant positive impact on the GDP per capita in the COMESA region. Additionally, the absorptive capacity have a positive effect on the ability of the COMESA region to absorb and benefit from the spillovers of short-term foreign capital flows. The findings suggest that the countries of the COMESA region should encourage short-term foreign capital flows and improve on the absorptive capacity in order to continue realizing a positive economic growth from the said flows (143 words).

Keywords:

Absorptive capacity, COMESA, economic growth, generalized method of moments, short-term foreign capital flows,

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