Financial Globalisation, Governance And Economic Growth In Sub-Saharan Africa

Abstract

Sub-Saharan Africa nations have faced challenges matching the economic growth witnessed in other regions. While financial globalisation has been touted as a potential catalyst for economic growth, its impact on sub-Saharan Africa has been limited. However, the literature suggests that the influence of financial globalisation on economic growth is significantly amplified in nations with strong governance systems. This study employs the system Generalised Method of Moment estimation to determine how governance moderates the relationship between financial globalisation and economic growth in sub-Saharan African economies. The findings indicate that governance plays a crucial role in enhancing the impact of financial globalisation on economic growth in the region. In this light, this study recommends that sub-Saharan African economies must prioritise measures that strengthen governance to achieve substantial growth. This includes leveraging financial globalisation to improve government efficiency, combat corruption, enhance regulatory quality, uphold the rule of law, and promote accountability. Furthermore, advancements in governance quality will have a positive ripple effect on economic growth, making it imperative for the region to focus on bolstering governance frameworks to unlock its true economic potential.