An Analytical Assessment of Financial Crisis in Developing Countries, Its Effects, Consequences and Implications

Abstract

This research was borne out of the need to revisit the global financial crisis and re-examine the issue of how well policy responses by developing countries in Africa have fared in addressing the crisis. In the analysis of the effect of financial crisis, two specific periods were chosen, the period during the financial crisis, and a period after the financial crisis, a decade later. The data used in the analysis of the crisis include: Current account as a percentage of GDP, external debt as a percentage of gross national income, exports of goods as a percentage of GDP, openness of the economy, economic growth rate, inflation rate, credit to the private sector by banks as a percentage of GDP and foreign direct investment inflows as a percentage of GDP. The findings of this research reveal that the global financial crisis is long gone, but its effect on many developing countries continues to deepen as the prolong and protracted effect of the crisis continues to linger. The crisis has not only caused a serious setback on the growth momentum gained by developing countries, but it also may endanger hard won economic development striders garnered over the recent years.