ARAB BANK FOR ECONOMIC DEVELOPMENT IN AFRICA

The Impact of the Global Financial Crisis on Arab States and Sub-Saharan Africa : An agenda for Growth-Inducing Collaboration

Prepared by : DR Diery Seck, Amie Gaye

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BADEA project report - The Impact of the Global Financial Crisis on Arab States and Sub-Saharan Afri BADEA project report - The Impact of the Global Financial Crisis on Arab States and Sub-Saharan Afri (1652 KB)

Abstract

The purpose of the present study is to assess the impact of the recent global financial crisis on Arab and SSA countries respectively and to examine the scope for mutually beneficial trade and investment between the two regions. To this end, the investigation focuses on whether the same economic variables were affected and the extent of that impact. The link between exposure to the global economy and performance of the domestic economy is also studied. Finally, sectors that could be targets for enhanced economic partnership arel be discussed.

The underlying motivation of the study is multi-faceted. For Arab economies that typically are not members of any regional economic community or risk-mitigating alliance, the medium to long term strategic benefits of reinforced trade with, and investment in, SSA, are substantial. First, they give durable access to Africa-based non-oil natural resources that may serve as input in various industries. Even non-oil producing Arab countries’ partnership with SSA provides diversification from traditional highly context-sensitive sources of revenues such as tourism and worker remittances. The young and growing domestic markets of SSA can constitute opportunities for Arab industries.

For SSA countries, expansion of economic partners from new geographical regions in addition to Western Europe and North America, opens new prospects of growth and integration into the world economy. This could result in more market access in new higher income countries and opportunities for technological transfer. Furthermore, access to readily available capital from oil-exporting countries seeking to diversify away from oil, coupled with SSA’s vast amounts of resources, could spur growth in Africa to considerably higher levels.

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