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Did the global financial crisis hit Africa? Insights from a multi-country firm level survey

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  • Duygun, Meryem
  • Isaksson, Anders
  • Kaulich, Florian

Abstract

We use a unique cross-sectional firm-level dataset collected in 2010 covering 19 countries and about 3000 manufacturing firms and show that, contrary to common perceptions, Sub-Saharan African countries were affected by the financial crisis. Our results suggest that productivity levels—labor and total factor productivity—are significantly important indicators for the probability of whether a plant will feel the ramifications of an exogenous shock like the recent financial crisis. Other important variables identified are firms' per worker levels of human and physical capital, size and age. Moreover, we find strong evidence for the role of trade as a transmission channel of the crisis, as it carries over from northern economies to Sub-Saharan Africa. It turns out that invoking the destination of exports into the analysis is crucial for understanding how African countries were affected by the crisis.

Suggested Citation

  • Duygun, Meryem & Isaksson, Anders & Kaulich, Florian, 2016. "Did the global financial crisis hit Africa? Insights from a multi-country firm level survey," Economic Modelling, Elsevier, vol. 58(C), pages 308-316.
  • Handle: RePEc:eee:ecmode:v:58:y:2016:i:c:p:308-316
    DOI: 10.1016/j.econmod.2016.06.008
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    References listed on IDEAS

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    1. Claessens, Stijn & Tong, Hui & Wei, Shang-Jin, 2012. "From the financial crisis to the real economy: Using firm-level data to identify transmission channels," Journal of International Economics, Elsevier, vol. 88(2), pages 375-387.
    2. Andrew K. Rose & Mark M. Spiegel, 2010. "Cross‐Country Causes And Consequences Of The 2008 Crisis: International Linkages And American Exposure," Pacific Economic Review, Wiley Blackwell, vol. 15(3), pages 340-363, August.
    3. Nicolas Berman & Philippe Martin, 2012. "The Vulnerability of Sub-Saharan Africa to Financial Crises: The Case of Trade," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 60(3), pages 329-364, September.
    4. Beck, Thorsten & Fuchs, Michael & Uy, Marilou, 2009. "Finance in Africa - Achievements and Challenges," Policy Research Working Paper Series 5020, The World Bank.
    5. Forbes, Kristin J., 2004. "The Asian flu and Russian virus: the international transmission of crises in firm-level data," Journal of International Economics, Elsevier, vol. 63(1), pages 59-92, May.
    6. Boshoff, Willem H., 2006. "The transmission of foreign financial crises to South Africa: a firm-level study," MPRA Paper 9029, University Library of Munich, Germany.
    7. Olivier J. Blanchard & Mitali Das & Hamid Faruqee, 2010. "The Initial Impact of the Crisis on Emerging Market Countries," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 41(1 (Spring), pages 263-323.
    8. Stijn Claessens & Luc Laeven & Deniz O Igan & Giovanni Dell'Ariccia, 2010. "Lessons and Policy Implications from the Global Financial Crisis," IMF Working Papers 10/44, International Monetary Fund.
    9. Hassan Y. Aly & Mark C. Strazicich, 2011. "Global Financial Crisis and Africa: Is the Impact Permanent or Transitory? Time Series Evidence from North Africa," American Economic Review, American Economic Association, vol. 101(3), pages 577-581, May.
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    Keywords

    Firm-level performance; Importers; Exporters;

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