The moderating role of financial development in the globalization-sustainable development nexus in some selected African Countries

This study examines the effects of the different dimensions of globalization on sustainable development with the moderating role of financial development in the relationship between globalization (using overall globalization) and sustainable development in 22 African countries. To ensure the robustness of the estimated results, the study applies both the static (fixed-effects) and dynamic model (system generalized method of moments, SYGMM) in achieving the study’s objective. It is of interest to note that the study conducts a regional analysis on the selected countries using random- and fixed-effects models. The dynamic panel results show that political globalization has a positive impact on sustainable development in the selected African countries, while economic and social globalization negatively influence sustainable development in the sampled countries. Overall globalization has a positive but insignificant effect on sustainable development. In examining the role of financial development, as a moderator, in the globalization-sustainable development nexus, the findings reveal that the interactive effect of financial development and globalization on sustainable development is negative. This suggests that financial development interacts with the globalization index to weaken the impact of the latter on sustainable development. In other words, the weak financial sector in the continent constitutes a leakage that drains the positive impact of globalization on sustainable development in African countries. Thus, the study recommends that African leaders should consciously implement policies that will deepen the current globalization level in the continent to fully enjoy the dividends of globalization in the attainment of sustainable development goals in the region.