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The Impact of the Global Financial Crisis on the Least Developed Countries

Author

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  • Cindy AUDIGUIER

    (Institute of International Finance (IIF))

Abstract

This paper investigates the short-run effects of the 2007–09 global financial crisis on GDP growth in least-developed countries (LDCs) compared to the effects on other low income countries and lower middle income countries. Thispaper shows that for many individual LDCs, 2009 was not extraordinarily bad. The output shock following the financial and economic crisis was less than expected and hit LDCs less than other developing countries. Moreover, the growth declines are on average well explained by the collapse in export demand. In two years, the volume of world trade fell by a third. Finally, there are few robust relationships between the annual cross-country growth variation between 2007 and 2009, and the variables reflecting policy and structural environment. The main exception is foreign aid that has mitigated the negative impact of external shocks on economic growth in LDCs.

Suggested Citation

  • Cindy AUDIGUIER, 2012. "The Impact of the Global Financial Crisis on the Least Developed Countries," Working Papers P50, FERDI.
    • Handle: RePEc:fdi:wpaper:440
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    File URL: http://www.ferdi.fr/sites/www.ferdi.fr/files/publication/fichiers/Ferdi-DT50-C.Audigier_WEB.pdf
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    Citations

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    Cited by:

    1. Escaith, Hubert & Tamenu, Bekele, 2013. "Least-developed countries' trade during the "super-cycle" and the great trade collapse: Patterns and stylized facts," WTO Staff Working Papers ERSD-2013-12, World Trade Organization (WTO), Economic Research and Statistics Division.
    2. Namsuk Kim, 2020. "How long will it take for LDCs and SIDS to recover from the impacts of COVID-19?," Working Papers 170, United Nations, Department of Economics and Social Affairs.

    More about this item

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • G01 - Financial Economics - - General - - - Financial Crises
    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries

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