27:T448,

This article analyses the impact of re-export demand on the Beninese economy. Re-export is dominant in Benin’s trade and may represent risks to the economy’s vulnerability. The methodology uses a dynamic computable general equilibrium model. It simulates two scenarios: the first considers a one-off decline in re-export demand in the first year, while the second analyses the impact of a recurring annual shock. The results, both at the aggregate and sectoral levels, indicate that the decline in re-export demand would negatively affect real GDP, domestic and net external demand, and most industries. This article extends the existing knowledge on the re-export phenomenon by adding a dynamic analysis of its potential impact at the aggregate and sectoral levels. The results confirm that re-export is a source of vulnerability for the Beninese economy. The authorities should focus on diversifying the economy and strengthening the competitiveness of the Port of Cotonou, in order to mitigate vulnerabilities linked to re-export activities.

JEL Codes: C68, F17

28:T481,

This paper examined the relationship between foreign direct investment (FDI) inflows and the growth rate in emerging and developing economies (EMDEs) and whether the development of the financial sector affects the growth-effect of FDI inflows for these economies. FDI enhances capital accumulation in the economy, and the level of financial sector development (FSD) affects the financial intermediation of funds, thereby enhancing the absorptive capability from investment. Using the dynamic panel threshold model (DPTM) for a balanced panel of 71 countries over the period 2000–2019, the paper finds a U-shaped relationship between the measures of FSD and the growth rate of an economy and does not find evidence for the ‘vanishing effect of finance’ for EMDEs. The growth-enhancing effect of FDI is much stronger for countries with a higher level of FSD. Our estimation techniques control for cross-sectional dependence and endogeneity in the case of a dynamic framework. The robustness results estimated using four-year non-overlapping averages as an observational unit support the findings.

JEL Codes: F23, F36, O16

29:T9bb,