Financial Globalization, Entrepreneurship Development and Economic Growth in Africa

This study sought to examine the impact of financial globalization and entrepreneurship development on economic growth in Africa. It addresses four main research questions concerning effects of financial globalization and entrepreneurship development on economic growth, as well as the moderating role of institutional quality. Utilizing data from thirty African countries spanning the period 2011 to 2020, the study employs Generalized Method of Moments (GMM) Estimation technique for analysis. The findings reveal a significant positive effect of entrepreneurship development on economic growth, highlighting the importance of fostering an entrepreneurial ecosystem in Africa. However, the study indicates the insignificance of financial globalization in driving economic growth in the continent, suggesting a need for reassessment of integration strategies. Despite the presence of strong institutions, the moderating effect of institutional quality on financial globalization appears to be negligible. Conversely, institutional quality significantly but negatively moderates the effect of entrepreneurship development on economic growth, suggesting that as institutional quality improves, the positive impact of entrepreneurship development on economic growth diminishes. Policy recommendations based on these findings emphasize the importance of prioritizing initiatives to support entrepreneurship, including access to finance, business training, and regulatory reforms. Policymakers are urged to reassess strategies for financial globalization, considering prudent regulations and prioritizing domestic economic development. Strengthening institutions remains crucial, although the study suggests that institutional reforms alone may not fully unlock the benefits of financial globalization. Additionally, efforts to enhance institutional quality should focus on addressing issues such as corruption and bureaucratic red tape to create an enabling environment for entrepreneurship and economic growth in Africa.