RIEB, Kobe University

Crises, Economic Integration and Growth Collapses in African Countries

The objective of this paper is to explore the 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, consistent with standard Mundell-Flemming type models, greater openness to trade and financial flows is found to mitigate the adverse effects of crises. These findings are robust to various measures of both openness and crises as well as to endogeneity concerns.