Capital instability and economic growth in Sub‐Saharan Africa

The current study finds that instability in capital formation ‐capital instability (CI), rather than export instability (EI) per se, is a relevant variable affecting growth of less developed countries (LDCs) of Sub‐Saharan Africa. Using a cross‐sectional analysis involving 1967–86 World Bank annual data on 33 Sub‐Saharan LDCs, the article observes that neither CI nor EI exercises a negative influence on GDP growth when arguments of the augmented production function, namely, labour, capital and exports, are allowed to vary. Controlling for the effects of these variables, however, reveals a substantial adverse impact of CI on GDP growth. Meanwhile, EI is found to be extraneous in the growth equation.