Introduction The innovation systems literature has provided a useful framework to analyse the linkages of firms and other organisations with both domestic and foreign actors. Although the concept of innovation systems was originally developed at the national level (Freeman, 1982; Nelson & Winter, 1982; Lundvall, 1985; Nelson, 1988, etc), the literature has expanded rapidly over the years. Since its origins innovation systems have been defined at different levels. National, regional, local, sectoral and technological systems of innovation now constituted alternative units of analysis to better understand the processes of creation, diffusion and use of knowledge. These different views, rather than conflicting, tend to complement each other and depend on the attributed boundaries to the system subject of analysis. This paper proposes that the reciprocal interaction between regional economic poles within the developing regions can be studied by employing systems of innovation perspective. The application of the systems of innovation perspective serves as a window to explore the quality of interactions in economic, education, productive activities and institutions. The importance of the regional dimension in stimulating the innovation capability and competitiveness of firms and regions has been examined by many authors (Asheim et al., 2003: Cooke, 2003, Wolfe, 2003, Isaksen, 2002, Malmberg and Maskell, 2002). The regional dimension is acquiring more relevance as the interactions between actors within the region become more intense. In the context of Africa, for example, the emergence of South Africa as an economic outlier in the region has created new challenges both opportunities and dangers for the rest of Africa. This paper suggests that a systems‟ of innovation perspective might be useful to examine how South Africa, as a regional pole in Africa, interacts with the region by sharing knowledge, learning and capacity building.

This thesis explores three important factors that have been central to the pursuit of economic development in developing countries, particularly those in Africa. These are capital flows, economic integration and financial crises. Chapter 1 examines the causes and consequences of capital flight in African countries. Building on standard portfolio choice model, the study links the phenomenon of capital flight to the domestic investment climate (broadly defined) and shows that African agents move their portfolios abroad as a result of a deteriorating domestic investment climate where the risk-adjusted rate of return is unfavourable. The results presented suggest that economic risk, policy distortions and the poor profitability of African investments explain the variation in capital flight. In addition, employing a PVAR and its corresponding impulse responses, the chapter shows that capital flight shocks worsen economic performance. Chapter 2 explores the (independent) effects of crises and openness on a large sample of African countries using dynamic panel techniques. Focusing on sudden stops, currency, twin and sovereign debt crises, the chapter shows that economic crises are associated with growth collapses in Africa. In contrast, economic openness is found to be beneficial to growth. More importantly, we find that, consistent with standard Mundell-Flemming type models and sticky-price open economy models, greater openness to trade and financial flows mitigates the adverse effects of crises. In the final chapter, we examine whether capital flows such as FDI, foreign aid and migrant remittances crowd-in or crowd-out domestic investment in developing countries. Applying recently developed panel cointegration techniques which can handle cross-sectional heterogeneity, serial correlation and endogeneity, we find that FDI and remittances have a positive and significant effect on domestic investment in the long-run while aid tends to act as a substitute for investment. We also conduct panel Granger causality analysis and find that the effect of FDI on investment is both transitory as well as permanent. That is, it tends to crowd-in domestic investment both in the short-run and in the long-run. We do not find any causal links between foreign aid and investment. The results show that, while remittances do not have causal effects on investment in the short-run, there is a bidirectional (causal) relationship between the two in the long-run.

This thesis examines dynamic relationships between inflation and monetary policy in a sample of African economies using quarterly data over the period 1980:01 to 2012:04. The literature on inflation dynamics and monetary policy focuses on developed economies, with little attention devoted to the African economies, which is potentially explained by the fact that in the past monetary policy played second fiddle because of fiscal policy dominance following episodes of high inflation and stabilization policies that occurred in the 1980's. This thesis fills an important gap in assessing African's monetary policy. The thesis predominantly uses the Vector-Autoregression (VAR) framework to examine the monetary policy frameworks of the African economies. The thesis finds that an interest rate shock on average explain a more significant proportion of the variance in the output gap and inflation than the exchange rate, in terms of analysing the decomposition of shocks to the economy. This shows a shift in the monetary policy focus away from exchange rate management to interest rate targeting as the African economies have become more market oriented. The monetary policy reveal strong asymmetric responses with respect to the macroeconomic variables when inflation exceeds its threshold value. The analysis suggests that monetary policy in the African economies is regime-dependent, propagated through the inflation thresholds, such that the authorities strongly implement policy changes when inflation goes beyond a certain threshold. The thesis reveals that by taking into account the prior belief of the monetary authorities, it helps produce better estimates of the performance of the monetary policy transmission mechanism, as it combines prior information with the sampling information which is contained in the data. The overall novelty of the thesis is that some African economies are adopting inflation targeting policies instead of exchange rate management. It is imperative that the subsequent inflation targeting frameworks will achieve monetary policy objectives for the African economies and the use of interest rate management should be continued.

Our dissertation tried to gain insight on the possible implications of the euro behavior and the EMU economic activity on the economies of typical Sub-Saharan African countries in a bipolar international monetary system. Chapter 1 has built a three country model in which an interdependent monetary policy game between two big economies, especially that of the United States and the EMU, has an impact on outcomes of a small country monetary policy. It was found that cooperation between big country monetary policymakers is beneficial for the small country whenever the shocks affecting big country economies imply changes in the euro-dollar exchange rate. Chapter 2 has dealt with the issue of the sustainability of pegging an African currency to the euro as EMU monetary authorities pursue a ``low inflation' policy and asymmetric shocks affect the anchor and the pegging country. Our model indicated that the key factor of this longevity is the virtual convertibility granted by the French Treasury to the CFA franc. Moreover, it appears that structural asymmetries are likely to make the currency peg to the euro more restraining. In Chapter 3, the relationships between EMU and Sub-Saharan Africa's countries are empirically investigated. This chapter showed that despite the appealing theoretical relations suggested by trade flows, the EMU business cycle and the European product prices have a limited impact on African country economies. But in the monetary area, the European Central Bank monetary policy leads significantly that of African countries according to the available data. African inflation performances follow that of EMU after some lags. This result confirms the ``operation account' mechanism effect which allows African countries to momentarily have a worse inflation performance without any devaluation. Chapter 4 empirically tackles the possible impact of euro-dollar exchange rate variations on Sub-Saharan Africa's country trade balances. After providing a theoretical model of a typical Sub-Saharan African country trade balance that suggests an inverted J-curve--like effect, it is found that only the trade balance of Benin among ten countries is affected by the movements of the euro-dollar exchange rate. The result also suggests that the inverted J-curve effect works at least partially for this country. / Notre recherche a essayé d'appréhender les possibles implications des variations de la valeur de l'euro et de l'activité économique au sein de la zone euro pour les pays de l'Afrique Sub-Saharienne. Ces implications sont considérées dans le contexte d'un système monétaire international bipolaire. Dans le premier chapitre, nous avons construit un modèle à trois pays dans lequel l'interdépendance des politiques monétaires des deux grandes économies, désignant celle de l'Union Monétaire Européenne (UME) et celle des Etats-Unis, a un impact sur la mise en œuvre de la politique monétaire d'un petit pays. Nous avons montré que la coopération entre les deux grandes économies est bénéfique pour le petit pays si les chocs auxquels les grandes économies sont confrontées entraînent des variations du taux de change de l'euro par rapport au dollar. Le deuxième chapitre a traité du caractère soutenable de l'ancrage d'une monnaie africaine à l'euro dans la mesure où, d'une part les autorités monétaires de l'UME poursuivent une politique très restrictive et, d'autre part, des asymétries structurelles affectent le pays ancre et les pays africains. Notre modèle a expliqué la longévité de la zone CFA essentiellement par la convertibilité virtuelle du franc CFA que confère le Trésor Français. Par ailleurs, il en est ressorti que sans le mécanisme du « compte d'opérations », le processus de désinflation qui a accompagné la formation de l'UME est susceptible d'avoir accru le niveau des contraintes de l'ancrage d'une monnaie à l'euro. Il est également apparu que l'environnement politique et économique défavorable en Afrique est un facteur de renforcement des contraintes liées à l'ancrage à l'euro. Une étude empirique des relations économiques entre l'UME et les pays de l'Afrique Sub-Saharienne a été menée dans le troisième chapitre. On y a découvert que, malgré les substantielles relations commerciales qui existent, le cycle économique de l'UME et les prix de gros européens n'ont qu'un impact limité sur les économies africaines. Néanmoins, sur le plan monétaire, la politique de la Banque Centrale Européenne influence significativement les politiques monétaires africaines. Le temps d'adaptation qui est constaté, avant que les performances en matière d'inflation ne se mettent au niveau des performances européennes, suggère que l'effet du compte des opérations est bien réel pour les pays de la zone CFA. Le quatrième chapitre a étudié l'éventuel impact des variations du taux de change de l'euro par rapport au dollar sur les balances commerciales des pays de l'Afrique Sub-Saharienne. Après avoir mis en exergue le cadre théorique suggérant un mécanisme similaire à celui d'une courbe en J inversée, l'étude trouve que seul la balance commerciale du Benin, parmi les dix pays de l'échantillon, est affectée par les mouvements du taux de change de l'euro par rapport au dollar. Selon ces résultats, l'effet de la courbe en J inversée fonctionne au moins partiellement pour ce pays.