This paper contributes to the understanding of the other neglected effects of financial development by investigating the relationship between financial development and the size of the informal economy using an unbalanced panel data of 41 Sub Saharan African countries over the period 1991-2015. Empirical evidence is based on Ordinary Least Squared, Fixed effects and system Generalized Method of moment. The results show that financial development measured by broad money and domestic credit to private sector have a negative and statistically significant effect on the informal economy. This clearly suggests that financial development reduces the size of the informal economy.

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Empirical studies on international trade highlight the role of innovation on international exchange but do not capture the effect of technological innovation when unobservable common factors (UCFs) are considered. This paper examines the long‐run relationship between technological innovation and international exchange using panel data for eight African countries over the period 1981–2013. The non‐stationarity and cointegration between technological innovation, international exchange, public investment, real gross domestic income and foreign direct investment were examined, controlling for cross‐sectional dependence and heterogeneity between countries. The results suggest that technological innovation in Africa remains low after controlling for UCFs, while public investment, real gross domestic product and foreign direct investment have significant impact on international exchange. Moreover, the results from the homogeneous and heterogeneous estimates, with and without UCFs, show that ignoring UCFs is likely to bias the coefficients. These findings reveal that African countries should invest more in public infrastructures and research and development to upgrade their capability To play an active role in the international market.

Conscious of the low infrastructure development in Economic Community of Central African States (ECCAS), governments have invested important financial resources aimed at increasing the global stock of infrastructure, which indexes have raised from 11.13 in 2000 to 16.65 in 2018. In the same period, the average export concentration index slightly decreased from 4.92 in 2000 to 4.90 in 2014. Given the disproportionate improvement of infrastructure and export diversification, the study objective is to examine the effects of infrastructure on export diversification in ECCAS over the 2000–2016 period. Overall export diversification, and export diversification at extensive and intensive margins, are used as indicators. The fully modified ordinary least squares (FMOLS) and the dynamic ordinary least squares (DOLS) estimators are used for semi-parametric instrumental variable estimates that correct for serial correlation and endogeneity problems. The empirical results indicate that electricity and mobile phone infrastructure positively contribute to the overall and the export diversification along intensive margin, while transport infrastructure and internet negatively contribute to export diversification. The policy implications are that the stock of infrastructure should be increased quantitatively and qualitatively. The spatial distribution of infrastructure must depend on their capacity to produce a variety of tradable goods and services. The export diversification policies in ECCAS will prioritize infrastructure and the development of new export categories. Investment in infrastructure may be accompanied by trade and investment liberalization and by financial development.