Globalization and business cycles synchronization in sub-Saharan Africa

Abstract

This study uses data on sub-Saharan African countries for the period from 1988 to 2018 to examine the effects of globalization and its dimensions on business cycles synchronization, while disentangling the de jure aspects from the de facto ones. Globalization is measured by the quasi-correlation coefficient of the KOF globalization indices while business cycles synchronization is measured by the quasi-correlation coefficient of the real GDP cyclical components, and the absolute differential in the real GDP growth rate preceded by the negative sign. We specified a static panel model which is estimated by the Feasible Generalized Least Squares in order to overcome the spatial dependence, heteroscedasticity and errors’ autocorrelation issues. We find that globalization and its dimensions foster the business cycles synchronization in sub-Saharan Africa. The distinction between the de jure and de facto aspects of globalization also shows that both aspects strengthen the business cycles synchronization. Importantly, we mention that beyond economic globalization which is considered as a traditional determinant of the business cycles synchronization, this study shows that social and political globalization also heighten the synchronization of the latter.