The Impact of the African Growth and Opportunity Act on Foreign Exchange and Financial Development of Sub-Saharan African Countries.

Publication Date

2025

Presentation Length

Poster/Gallery presentation

College

Jack C. Massey College of Business

Department

Economics and Finance

Student Level

Undergraduate

SPARK Category

Research

Faculty Advisor

Dr. Colin Cannonier

SPARK Session

10:15-11:45 Posters: Honors Projects

Presentation Type

Poster

Summary

I will be presenting a poster with the research I have been working on with Dr. Cannonier for my Independent Honors Project. This research study is in economics and examines the Impact of the African Growth and Opportunity Act on Foreign Exchange and Financial Development of Sub-Saharan African Countries.

The African Growth and Opportunity Act (AGOA) is a unilateral preferential trade development initiative for eligible Sub-Saharan African (SSA) countries, allowing for access to the United States markets since its enactment in 2000. This article analyzes the macroeconomic impact of AGOA on financial development and its role in the strength of SSA countries’ foreign exchange, a large factor in global relations between nations, yet one that has received minimal attention in academic literature. Using data from the World Bank during the period of 2000–2021, we estimate the impact using panel data analysis, factoring for eligible and ineligible countries, and controlling for both foreign direct investment (FDI) and trade from the SSA region to non-U.S. countries. We find that AGOA has contributed positively to the financial development of SSA countries increasing (GDP, foreign direct investment (FDI) inflows, employment, and cash flow) as compared to the data from non-eligible SSA countries. The findings reveal the resulting development attributed to AGOA, on average, has a significant impact on the strength of each eligible SSA nation’s currency as AGOA has positively affected the region’s trade. Our results from AGOA’s effectiveness in promoting a strong currency have important policy implications for non-eligible SSA countries to comply with the AGOA legislation to (further the intensification of African exports to the U.S. markets) or (become eligible as beneficiaries of the AGOA preferential trade access.)

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