The importance of financial development in the promotion of manufactured exports in Africa

Using a sample of twenty-nine African countries for which adequate time series data are available, this chapter explores the nexus between financial development and manufactured exports. This particular relationship is especially important in the context of Africa since export diversification away from resources and agriculture is an important part of Africa’s growth strategy. Our results show that in eleven countries, financial development causes manufactured exports and manufactured exports causes financial development in seven countries. We then explore reasons for these findings and find that a rich and surprising set of factors explain our findings.