Date: 2010
Type: Working Paper
Fragile Countries and the 2008-2009 Crisis
Working Paper, EUI RSCAS, 2010/13, European Report on Development
ALLEN, Franklin, GIOVANNETTI, Giorgia, Fragile Countries and the 2008-2009 Crisis, EUI RSCAS, 2010/13, European Report on Development - https://hdl.handle.net/1814/13536
Retrieved from Cadmus, EUI Research Repository
This paper analyses the channels through which the economic and financial crisis of 2008-2009 is
transmitted to fragile countries in Sub-Saharan Africa. Trade stands out as the main direct channel,
even though intra-Africa remittances play a relevant role, given that most migrants in Sub-Saharan
Africa fragile countries cannot afford the cost of migrating to Europe or to the United States and stay
close, remaining in the continent. Whether reduced aid flows also act as a crisis transmission channel
remains an open question, even though preliminary estimates suggest that, at least in the medium run,
OECD countries are likely to lower aid, with potentially very damaging effects on fragile countries.
The paper also shows that fragile countries are characterised by very low resilience and capacity to
cope with shocks. It concludes, by highlighting how Sub-Saharan Africa fragile countries’
policymakers’ room for manoeuver is limited in periods of crisis because of low fiscal space and
limited institutional capacity. It advocates that the right response to the crisis would be to mobilise
domestic resources, although this will require functional institutions able to offset the potential tradeoffs
between adverse short-term shocks and a long-term perspective.
Additional information:
European Report on Development
Cadmus permanent link: https://hdl.handle.net/1814/13536
ISSN: 1028-3625
Series/Number: EUI RSCAS; 2010/13; European Report on Development