# 18. Financial Development and the Diffusion of Technologies under Uncertainty in Africa

Zivanemoyo Chinzara§

(Email: Zchinzara@uneca.org)

Macroeconomic Policy Division

United Nations Economic Commission for Africa


The study empirically examines the role of financial development in the timing of technology adoption as well as the intensity of the technology diffusion of thirteen sectoral technologies, using a panel of 44 Sub Saharan Africa (SSA) nations. These technologies cover sectors such as agriculture, communication and information technology, industry, and transport. The results show that financial development improves the timing and intensity of technology diffusion both directly, and indirectly, through reducing the risk associated with new technologies. However, the economic significance of the results differs across technologies, with the information and communication technologies showing more responsiveness to changes in financial depth. There is also evidence to suggest that, subject to the level of economic development, some technologies diffusion faster, while others diffuse slower. We articulate the implications of the findings of the study for mobilizing domestic resources to finance industrialization and development in Africa.

JEL Classification: E44, G21, O30, O33

Key Words: Financial Depth, Technology Diffusion, Timing of Adoption, Economic Development, Macroeconomic Volatility, Institutions, Dynamic panels, GMM

  • §The views and opinion expressed are those of the author. They do not necessarily reflect the views of the United Nations Economic Commission for Africa (UNECA) or its affiliates.

I gratefully acknowledge the useful comments of Bartholomew Armah, Adam Elhiraika, and Hopestone Chavula from the Macroeconomic Policy Division (MPD) of UNECA. I am grateful to the useful comments provided by the MPD staff and staff members from other divisions who attended my presentation of an earlier version of this paper. Any errors contained herein are mine.

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