Does institutional quality matter in the financial Development-Economic complexity Nexus? Empirical insights from Africa

Olalekan Olaniyi, Clement; Mbaya Odhiambo, Nicholas

doi:10.1016/j.resglo.2023.100173

Research in Globalization

2023

DOI: 10.1016/j.resglo.2023.100173

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Does institutional quality matter in the financial Development-Economic complexity Nexus? Empirical insights from Africa

Clement Olalekan Olaniyi,

Nicholas Mbaya Odhiambo

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2024

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Cited by 11 publications

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Financial Development, Institutions, and Technological Innovation in Africa

Adekoya,

Kenku,

Al‐Faryan

2024

Int. J Fin Econ

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Most African countries are notably confronted with inefficient financial systems, weak institutional arrangements, and low technological innovations. This motivates this study to examine if financial development has any implications on technological innovation in the region, while putting the direct and nonlinear role of institutional quality into consideration. We find that, excluding institutional quality, financial development has a negative impact on technological innovation. The findings are not altered when the influence of institutional quality is linearly examined. The threshold results, however, show that financial development positively affects technological innovation at the low institutional quality level, whereas financial development has no significant impact on technological innovation at higher institutional quality levels. This paradox, although in contrast to expectation, explains the reality of the institutional arrangements in the African countries. They are not just weak, but very restrictive, thereby concentrating the financial means into the hands of few elites who then discretionarily engage in innovative activities. The direct impact of institutional quality on technological innovation is heterogeneous, as it depends on the specific institutional quality indicators and their threshold levels. These findings have crucial policy implications for the governments of the African countries.

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Financial Development, Institutions, and Technological Innovation in Africa

Adekoya,

Kenku,

Al‐Faryan

2024

Int. J Fin Econ

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Financial development and sustainable development: A review of literature

Akhtar,

Rashid

2024

Sustainable Development

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In the contemporary world, the sustainability of the economic system and its related issues are of major concern for both policy makers and practitioners. The financial sector's role in this context has gained significant attention over the past decades. Although theoretical studies are on the rise, few scholars consolidate both theory and practice. This study addresses this gap through comprehensive bibliometric analysis, mapping the research landscape in the finance‐sustainability field, and encompassing both optimistic and skeptical perspectives. It reviews and synthesizes key theoretical and empirical literature focusing on most recent studies. Specifically, it emphasizes broader aspects of financial development—depth, access, efficiency, and stability—in critically analyzing the economic, environmental, and social pillars of sustainable development, which are distinct yet highly interconnected. It further provides a detailed analysis of sustainable development theories, highlighting their shortcomings and future prospects. Particularly, this study identifies different dimensions, significant factors, and important indicators of sustainability which are vital for achieving and understanding long‐term sustainable development. Some practical implications are also discussed.

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Does economic complexity provide antidotal pathways to evade the resource curse syndrome? A novel role for institutions

Olaniyi,

Odhiambo

2024

Sustainable Development

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This study offers the first empirical attempt to examine the role of institutional quality in influencing the contribution of economic complexity to evading resource curses and reducing resource dependency in resource‐rich countries. We analyze data from 20 resource‐rich African countries covering the years 1995–2021, using fully modified ordinary least squares, a Driscoll–Kraay nonparametric covariance matrix, and the method of moments‐quantile regression. These countries predominantly suffer from resource curses, resource dependence, weak economic complexity, and deficient institutions. The findings reveal that economic complexity has no direct potency to spur less reliance on natural resources and mitigate resource curses. Institutional quality, on the other hand, creates stimuli and technical support that facilitate less resource dependence and offer countermeasures to evade resource curses in resource‐rich African countries. Interestingly, institutional quality strengthens economic complexity by increasing knowledge‐based productive capacity, technological innovation, extending non‐resource sectors and exports, promoting innovative business opportunities, fostering entrepreneurship, diversifying economies, reducing resource dependence, and mitigating resource curses. The study concludes that institutional quality enables economic complexity to spur less reliance on natural resources and pave the way to evade resource curses in resource‐rich African countries. The primary policy implications of the study suggest that the capacity of resource‐rich African countries' economic complexity to reduce resource dependence and provide strategies to circumvent the resource curse is contingent upon the efficiency and effectiveness of their institutions.

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Does institutional quality matter in the financial Development-Economic complexity Nexus? Empirical insights from Africa

Cited by 11 publications

References 100 publications

Financial Development, Institutions, and Technological Innovation in Africa

Financial Development, Institutions, and Technological Innovation in Africa

Financial development and sustainable development: A review of literature

Does economic complexity provide antidotal pathways to evade the resource curse syndrome? A novel role for institutions

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