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Using country level panel data over the period 1970–2011, this paper evaluates the direct as well as indirect impact of three types of financial flows (foreign direct investment, remittances and official development aid) on the per capita income of a group of low and middle income countries. The empirical results suggest that the direct effect of official development aid in developing countries is mostly negative. This conclusion also holds when the sample is divided into different regions. All three estimation techniques used (i.e., Ordinary Least Squares, panel fixed effects and system Generalised Method of Moments) yield broadly similar results. We find that official development aid and government spending are complementary and hence, depending on the level of effectiveness of government spending programs, official development aid can have an indirect positive impact on income per capita. On the other hand, both remittances and foreign direct investment appear to have a direct positive and statistically significant effect on per capita income.

In this study, the efficacy of globalization in influencing income growth within the Sub-Saharan Africa (SSA) from 1982 to 2020 is being examined. The "Konjunkturforschungsstelle Globalization Index" (KOFGI) was used to measure globalization at the overall, economic, social, and political level, while income growth was captured using the growth rate of gross national income per capita. The data employed in the analysis were gotten from World Bank and KOFGI database. The analysis follows a sequential order of unit root test based on the augmented Dickey-Fuller, autoregressive distributed lag (ARDL) bounds test for cointegration, and error correction model. The unit root test revealed that the order of integration of the variables were mixed at levels and first difference. The bounds test showcased that all the dimensions of globalization exhibited long-run association with income growth. The short-run result indicated that globalization wielded a negative and significant effect on income growth. A unit percent increase in globalization put forth a 1.3818% decrease in income growth. In the long-run, globalization however exerted a positive but insignificant sway on income growth in the SSA. The implication of this is that though globalization poses a short-run negative impact on income growth, the SSA can move along the learning curve to derive some long-term benefits that emanate from global interactions. It becomes pertinent for the SSA to see globalization as a long-term avenue for propelling income growth, bearing in mind that the short-run negative effect can be corrected periodically as the economy moves along the learning curve of globalization.