Title: Upgrading economic complexity in Africa: the role of remittances and financial development

Authors: Folorunsho M. Ajide; Tolulope T. Osinubi

Addresses: Department of Economics, University of Ilorin, Ilorin, Nigeria ' Department of Economics, Obafemi Awolowo University, Ile-Ife, Nigeria

Abstract: This study contributes to the growing literature on economic complexity by providing insights on whether financial development and migrant remittance serve as policy tools in improving African economic sophistications. The study employs panel ARDL, the novel method of moment-quantile regression (MM-QR) and Dumitrescu-Hurlin panel causality to analyse the panel data of 21 African countries over a period of 1996-2017. The results reveal that financial development and migrant remittances can serve as veritable tools in upgrading the level of economic complexity in Africa. Further analysis suggests that remittance inflows and financial development perform substitutability role in upgrading African economic complexity. The study concludes that financial development stimulates economic actors to be innovative in the production process. It also helps economic agents to upgrade quality of products through huge investment in research and innovation leading to higher degree of economic complexity. We discuss the policy implications of the findings.

Keywords: economic sophistications; broad-based financial development; remittances; method of moment-quantile regression; MM-QR.

DOI: 10.1504/GBER.2024.137620

Global Business and Economics Review, 2024 Vol.30 No.3, pp.359 - 382

Received: 28 Mar 2022
Accepted: 02 Oct 2022
Published online: 02 Apr 2024 *

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