{"title":"Does financial openness matter for economic transformation in sub-Saharan Africa?","authors":"Valentine Soumtang Bime, Dieudonné Mignamissi, Agathe Cassandra Koumis Ngagni","doi":"10.1007/s10644-024-09578-0","DOIUrl":null,"url":null,"abstract":"<p>There is inadequate knowledge about the relationship between financial openness and economic transformation, particularly in the African context. This lack of knowledge fuels the passion for research, especially with the emergence of new refined indicators of both financial openness and economic transformation. The objective of this paper, therefore, is to assess the impact of financial openness on the economic transformation process using as sample sub-Saharan African (SSA) countries, with study period spanning from 1995 to 2020. To do so, we use the economic complexity index as an indicator of economic transformation, and the KAOPEN index of Chinn and Ito (2006) to capture financial openness. Based on the Instrumental Variables Two-Stage Least Squares (IV-2SLS) technique, we obtain the following results: Firstly, financial openness is a powerful driver of economic transformation in SSA; secondly, our results remain stable following several sensitivity tests related to economic digitization, financial development, types of natural resources, quality of institutions, historical, cultural, and geographic factors; and finally, our results are robust to the use of alternative measures of financial openness and economic transformation, but also to changes in instrumentation and estimation technique. Consistent with our result, we suggest that policymakers should boost the attractiveness for foreign direct and portfolio investments while maintaining fundamental balances.</p>","PeriodicalId":46127,"journal":{"name":"Economic Change and Restructuring","volume":"11 1","pages":""},"PeriodicalIF":4.0000,"publicationDate":"2024-02-06","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Economic Change and Restructuring","FirstCategoryId":"96","ListUrlMain":"https://doi.org/10.1007/s10644-024-09578-0","RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q1","JCRName":"ECONOMICS","Score":null,"Total":0}
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Abstract
There is inadequate knowledge about the relationship between financial openness and economic transformation, particularly in the African context. This lack of knowledge fuels the passion for research, especially with the emergence of new refined indicators of both financial openness and economic transformation. The objective of this paper, therefore, is to assess the impact of financial openness on the economic transformation process using as sample sub-Saharan African (SSA) countries, with study period spanning from 1995 to 2020. To do so, we use the economic complexity index as an indicator of economic transformation, and the KAOPEN index of Chinn and Ito (2006) to capture financial openness. Based on the Instrumental Variables Two-Stage Least Squares (IV-2SLS) technique, we obtain the following results: Firstly, financial openness is a powerful driver of economic transformation in SSA; secondly, our results remain stable following several sensitivity tests related to economic digitization, financial development, types of natural resources, quality of institutions, historical, cultural, and geographic factors; and finally, our results are robust to the use of alternative measures of financial openness and economic transformation, but also to changes in instrumentation and estimation technique. Consistent with our result, we suggest that policymakers should boost the attractiveness for foreign direct and portfolio investments while maintaining fundamental balances.
期刊介绍：
Economic Change and Restructuring has been accepted for SSCI and will get its first Impact Factor in 2020!Since the early 1990s fundamental changes in the world economy, under the auspices of increasing globalisation, have taken place
On one hand, the disappearance of the centrally planned economies and the progressive formation of market-oriented economies, have brought about countless systematic changes, where new economic structures, institutions, competences and skills involve complex processes, changes which are still underway and which necessitate adaptation and restructuring to form competitive market economies.
On the other hand, many developing economies are making great strides as regards economic reform and liberalisation, and are emerging as new global players. They show an innovative capacity to position themselves in the global economy and to compete with industrialised countries, which are generally believed to be witnessing the rapid erosion of their established positions. These developments are accompanied by the exacerbation of the world competition.
Both processes involve transition and the emerging economies, in searching for a new role and scope for public policies and for a new balance between public and private partnership, seem to currently be converging, especially with respect to the policies needed to create appropriate and effective market institutions and integrated reform policies, and to increase the standards of the population''s education levels.
Thus, liberalisation and development policies, in attempting to strike a difficult balance between social and environmental needs, must be integrated more coherently. This complexity calls for new analytical and empirical approaches that can explain these new phenomena, which often go beyond the over-simplified facts and conventional ''wisdom'' that emerged at the start of the transition in the early 1990s.
Economic Change and Restructuring (formerly ''Economics of Planning''), by keeping abreast of developments affecting both transitional and emerging economies, is aimed to attract original empirical and policy analysis contributions that are focused on various issues, including macroeconomic analysis, fiscal issues, finance and banking, industrial and trade development, and regional and local development issues.
The journal aspires to publish cutting edge research and to serve as a forum for economists and policymakers working in these fields.Officially cited as: Econ Change Restruct
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