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The limited role of small stock exchanges in economic development: A case study of Mozambique and Swaziland

The limited role of small stock exchanges in economic development: A case study of Mozambique and Swaziland
The limited role of small stock exchanges in economic development: A case study of Mozambique and Swaziland

The establishment of a successful stock market in a developing economy can provide a major source of development finance, both channelling domestic savings and attracting foreign investment. But small markets generally fail. Two micro-markets, Mozambique and Swaziland, provide an interesting case study to examine the features of new markets in sub-Saharan Africa that differ in a number of ways, including colonial legacy, membership of the Common Monetary Area and the dynamics of the political economy that defines the links between the citizens, the local elite and the state. In both countries, the operational aspects ofthe stock exchange are clearly inadequate as a means ofpromoting international investment. Thus, gains from regional integration initiatives or foreign investment are unlikely, as the market's small size and incomplete institutions currently offer limited potential for either domestic or international risk diversification. However, the political economy in both countries is the real barrier to growth.

Frontier stock markets, Mozambique, Political economy, Swaziland
0376-835X
205-224
Hearn, Bruce
45dccea3-9631-4e5e-914c-385896674dc2
Piesse, Jenifer
b85393d2-b4ae-49f2-87cd-8b5007c99e97
Hearn, Bruce
45dccea3-9631-4e5e-914c-385896674dc2
Piesse, Jenifer
b85393d2-b4ae-49f2-87cd-8b5007c99e97

Hearn, Bruce and Piesse, Jenifer (2010) The limited role of small stock exchanges in economic development: A case study of Mozambique and Swaziland. Development Southern Africa, 27 (2), 205-224. (doi:10.1080/03768351003740522).

Record type: Article

Abstract

The establishment of a successful stock market in a developing economy can provide a major source of development finance, both channelling domestic savings and attracting foreign investment. But small markets generally fail. Two micro-markets, Mozambique and Swaziland, provide an interesting case study to examine the features of new markets in sub-Saharan Africa that differ in a number of ways, including colonial legacy, membership of the Common Monetary Area and the dynamics of the political economy that defines the links between the citizens, the local elite and the state. In both countries, the operational aspects ofthe stock exchange are clearly inadequate as a means ofpromoting international investment. Thus, gains from regional integration initiatives or foreign investment are unlikely, as the market's small size and incomplete institutions currently offer limited potential for either domestic or international risk diversification. However, the political economy in both countries is the real barrier to growth.

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More information

e-pub ahead of print date: 29 April 2010
Published date: June 2010
Keywords: Frontier stock markets, Mozambique, Political economy, Swaziland

Identifiers

Local EPrints ID: 423418
URI: http://eprints.soton.ac.uk/id/eprint/423418
ISSN: 0376-835X
PURE UUID: 2a46bdbd-6fd4-4e08-a58e-887c3dd9e7b6
ORCID for Bruce Hearn: ORCID iD orcid.org/0000-0001-9767-0198

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Date deposited: 21 Sep 2018 16:30
Last modified: 23 Jul 2022 02:22

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Author: Bruce Hearn ORCID iD
Author: Jenifer Piesse

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