Globalization And Exchange Rates In Africa: Issues And Challenges

Abstract

This paper seeks to find out how globalization and exchange rates have been affecting the development of African countries. The study focuses on direct and indirect relationships between the exchange rate and other macroeconomic indicators. As for Globalization, is the process of intensification of economic, political social and cultural relations across international boundaries aimed at the transcendental homogenization of political and socio-economic theory across the globe. This paper aims to examine both the negative and the positive impacts of globalization on African states and make some recommendations among which are to improve democratization process, make the task of poverty eradication more indigenous. The paper contributed in supplementing the existing (scarce) literature on dollarization/eurorization effects on international trade balance, particularly during crisis periods. The paper adopted historical and analytical approach based on existing literature. Hence, secondary source of data was adopted. The paper revealed that during the global economic crisis ,the real exchange rate impact on the current account was reduced, which consequently limited the applicability of devaluation as an appropriate instrument for the reduction of external imbalances.