Is financial development shaping or shaking economic sophistication in African countries?

Njangang, Henri; Asongu, Simplice A.; Tadadjeu, Sosson; Nounamo, Yann

doi:10.2139/ssrn.3806772

Cited by 15 publications

(16 citation statements)

References 21 publications

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“…This finding reveals the evidence of a natural resources–economic sophistication curse. This result reaffirms those of Njangang et al (2021) who report that resource rents worsen the production of sophisticated products in Africa. These could be the result of the negative impact of resource revenues on research development and human capital, which hinder the structure of the production (Edwards, 2016; Kamguia et al, 2022).…”

Section: Resultssupporting

confidence: 90%

“…Finally, we use the total natural resource rents to GDP (rents) to control the richness in natural resources. The results of previous studies suggest that resource rents have a negative impact on economic sophistication (Njangang et al, 2021). The first two control variables come from Penn World Table 9.1 (PWT 9.1), while the last two were collected from World Development Indicators (WDI, 2021).…”

Section: Literature Reviewmentioning

confidence: 99%

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Investigating the effects of globalization on economic sophistication in selected African countries

Nguea

Fotio

Baida

2022

African Development Review

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This research investigates the effects of globalization on economic sophistication for 27 African countries over the 1996–2017 period by employing Driscoll and Kraay standard errors and system generalized method of moments. We find that globalization enhances economic sophistication. Accounting for the dimensions of globalization, the results show that economic, social, and political globalization matter for enhancing economic sophistication. Furthermore, the decomposition of economic and social globalization indicates that financial globalization, trade openness, and FDI enhance economic sophistication, whereas Internet usage negatively affects economic sophistication. Policies to sustain the global integration pathway can enhance the diversity and sophistication of products in African countries.

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Section: Resultssupporting

confidence: 90%

Section: Literature Reviewmentioning

confidence: 99%

Investigating the effects of globalization on economic sophistication in selected African countries

Nguea

Fotio

Baida

2022

African Development Review

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“…This ever-growing evolution of ICTs has led policy makers and researchers alike to take a greater interest in the effects of ICTs on different aspects of socio-economic and political life. Thus, it has been demonstrated in the literature, although not exhaustive, that ICTs have positive effects, on employment (Mbongo and de Berquin 2019 ; Kılıçaslan and Töngür, 2019 ), trade (Abeliansky et al 2021 ); industrialisation (Njangang and Nounamo 2020 ); environment quality (Avom et al 2020 ; Asongu et al 2018 ; Higón et al 2017 ); corruption reduction (Sassi and Ali 2017 ; Kanyam et al 2017 ); democracy (Ali 2020 ); health outcomes (Dutta et al 2019 ); education (Asongu et al 2021 ); poverty reduction (Ofori et al 2021 ); income inequality reduction (Asongu and Odhiambo 2019 ), and most importantly economic growth (Sawng et al 2021 ; Appiah-Otoo and Song 2021 ; Hong 2017 ; Ofori and Asongu 2021 ; Ofori et al 2022 ). Despite this dynamic and extensive literature, very few studies have looked at the effect of ICT on economic complexity.…”

Section: Introductionmentioning

confidence: 99%

“…To date, numerous studies have examined the determinants of a country's economic sophistication, highlighting factors such as human capital, foreign direct investment, innovation, financial development, remittances, birthplace diversity, intellectual property, intelligence, institutional quality, financial openness, foreign aid, colonisation, individualism, IMF programmes or conditionality and gender equality (Sweet and Maggio 2015 ; Coccia 2017 , 2020 , 2021 ; Valette 2018 ; Lapatinas and Litina 2019 ; Chu 2020 ; Kannen 2020 ; Bahar et al 2020 ; Nguyen et al 2020 ; Saadi 2020 ; Njangang et al 2021 ; Keneck-Massil and Nvuh-Njoya 2021 ; Nguyen 2021 ; Kamguia et al 2022 ; Vu 2022 ; Demir 2022 ; Maurya and Sahu 2022 ). However, studies examining the role of ICTs are very limited in number.…”

Section: Introductionmentioning

confidence: 99%

Does information and communication technologies affect economic complexity?

2023

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Information and communication technology (ICT) and economic complexity are two concepts that have been extensively used in the recent literature. However, studies linking these two concepts are still at a premature stage and few existing studies have focussed on the role of the internet in a short-term context. Indeed, ICT measures the percentage of the population with access to the internet while economic complexity quantifies the set of productive capabilities and know-how embedded in the production process. This study aims to examine for the first time the long-term effect of ICT (quality and quantity) on economic complexity in a large panel of 112 countries over the period 1986–2017. The detailed analysis explores the long run and directional relationships using the homogeneity test, the cross-sectional dependence test, stationary tests in the presence of cross-sectional dependence, the panel cointegration test, dynamic OLS (DOLS), fully modified OLS (FMOLS), and the Granger panel causality test. The study finds long-run relationships between ICT, economic complexity, per capita GDP, government spending, and natural resources. Cointegration regression shows that the quality and especially the quantity of ICT, economic growth, and government spending have a positive and significant effect on economic complexity in the long run. Similarly, the results show that natural resource rent significantly impedes economic complexity. Finally, the results of the Granger causality test confirm the existence of a bidirectional relationship between ICT and economic complexity. Supplementary Information The online version contains supplementary material available at 10.1007/s43546-023-00467-8.

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“…Several determinants of economic complexity have been analysed in the literature, including innovations (Nguyen & Su, 2021), internet (Lapatinas, 2019), remittances (Chauke & Ncanywa, 2021;Saadi, 2020), human capital (Zobeiri & Motameni, 2020) and financial openness (Yu & Qayyum, 2021). However, only the studies by Chu (2020); Nguyen and Su (2021) and Njangang et al (2021) have highlighted the role of financial development (FD) in economic complexity. A sophisticated economy includes high-tech or knowledge-intensive industries, which requires huge upstream investments in promoting and extending innovation.…”

Section: Introductionmentioning

confidence: 99%

Financial development and economic complexity: The role of country stability

Ndoya,

Ongo Nkoa,

Kemeze

et al. 2023

Econ of Transit and Inst Chang

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The aim of this paper is to examine the relationships between financial development (FD), economic complexity and country stability. To achieve this objective, this paper applies a finite mixture model to a sample of 92 developing countries over the period 1995–2018. The study posits that the effect of FD on economic complexity differs across groups of countries with similar but unobserved characteristics. The study finds that the effect of FD on economic complexity varies across four classes of countries, which differ according to their level of economic, political and financial stability. Furthermore, the study argues that stable countries are more likely to be in class 1, including more performing countries – that is, the group of countries where FD spurs economic complexity. This finding remains consistent even when alternative measures of FD and economic complexity are considered. Hence, efforts by developing countries to undertake sound reforms to reduce economic, political and financial risks could help leverage the benefits of FD in fostering the development of sophisticated and complex economies.

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Is financial development shaping or shaking economic sophistication in African countries?

Cited by 15 publications

References 21 publications

Investigating the effects of globalization on economic sophistication in selected African countries

Investigating the effects of globalization on economic sophistication in selected African countries

Does information and communication technologies affect economic complexity?

Financial development and economic complexity: The role of country stability

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