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Linkages Between Financial Deepening, Trade Openness, and Economic Development: Causality Evidence from Sub-Saharan Africa

  • Gries, Thomas
  • Kraft, Manfred
  • Meierrieks, Daniel

Summary This contribution tests for causality between financial deepening, trade openness, and economic development for 16 sub-Saharan African countries. The Hsiao-Granger method is used to add to the existing empirical evidence. Only limited support is found for the popular hypothesis of finance-led growth. In general, the evidence indicates that financial deepening and trade openness have swayed economic development rather marginally. In particular, the investigated countries have failed to benefit from financial deepening. Development strategies prioritizing financial or trade sector development hence cannot be supported.

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Article provided by Elsevier in its journal World Development.

Volume (Year): 37 (2009)
Issue (Month): 12 (December)
Pages: 1849-1860

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Handle: RePEc:eee:wdevel:v:37:y:2009:i:12:p:1849-1860
Contact details of provider: Web page: http://www.elsevier.com/locate/worlddev

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