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Crises, Economic Integration and Growth Collapses in African Countries

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  • Abdilahi Ali
  • Katsushi S. Imai

Abstract

In the past few decades, many African countries have implemented policies of trade and financial liberalisation. As a result, Africa is today more integrated into the global economic system than it was a few decades ago. Yet, like developing countries in other regions, African economies have also encountered their share of economic and financial crises. The objective of this paper is to explore the (independent) effects of crises and openness on a large sample of African countries. Focusing on sudden stops, currency, twin and sovereign debt crises, the paper shows that crises are associated with growth collapses in Africa. In contrast, openness is found to be beneficial to growth. More specifically, we find that, consistent with standard Mundell-Flemming type models, greater openness to trade and financial flows mitigates the adverse effects of crises. These findings are robust to various measures of both openness and crises as well as to endogeneity concerns.
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Suggested Citation

  • Abdilahi Ali & Katsushi S. Imai, 2013. "Crises, Economic Integration and Growth Collapses in African Countries," The School of Economics Discussion Paper Series 1302, Economics, The University of Manchester.
  • Handle: RePEc:man:sespap:1302
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    Cited by:

    1. A. Ovchinnikov & Z. Kozenko & M. Bichkov & V. Kabanov & A.Karpova, 2015. "Strategic Management of Sustainable Development of Agro – Industrial Complex with Economic Integration," European Research Studies Journal, European Research Studies Journal, vol. 0(3), pages 307-315.
    2. Ekpo Akpan & Chuku Chuku, 2017. "Working Paper 291 - Regional Financial Integration and Economic Activity in Africa," Working Paper Series 2403, African Development Bank.
    3. Niklas Potrafke, 2015. "The Evidence on Globalisation," The World Economy, Wiley Blackwell, vol. 38(3), pages 509-552, March.

    More about this item

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • F15 - International Economics - - Trade - - - Economic Integration
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • O55 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Africa

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