Dear Jean

I don't have any ideas about the weak economic performance in Africa. But, I mean that We can not underestimate the contribution of exchange rate regime in economic system. Since the exchange rate regime impacts on the effectiveness of trade openness, capital openness and the evolutions in domestic production through the competition effects.

I give you some papers for more information

http://www.jstor.org/stable/27866525?seq=1#page_scan_tab_contents

http://muse.jhu.edu/article/261232

I hope that helps you

Canh

Thanks Dear Canh. Why not, for those countries,  using directly a major currency (currency of the main economic partner) and concentrate on the necessary structural reform that can set the foundations for a strong growth in the medium and long terme, and bounce back later on ?

Dear Pro Jean

Of course, in some countries when they face to very high inflation, they may choose to use directly a major currency which is usually USD. But, we also know that, if you use other country's currency for your economy (which is the worst case of dollarization), your economy will be appendanted to this country with a lot of bad consequences since you have not any independent in monetary policy, you have not any independent fiscal policy (because you can not borrow by domestic currency, you have to borrow by other currency)

In my opinion, we have to be clear that for long - term benefit, one of the most important economic variables is the stability in currency which means the stability at low inflation.

So that, this is a very complicated situation for countries with weak currenct, high inflation and low economic growth that we usually have to sacrify somethings for long - term benefits.

However, every new government always wants to win some short - term targets since they promised in their election campanes, and they also want to make some achievement for their next eclection so that the situation may not be solve solely.

Best

Canh

The following paper can give you a hint

Exchange Rate has relation with economic development. Under the globalization the economic performance of the country depends upon or share in world trade and it will be decided by hardness/softness of our currency in the world market.

Dear Jean

I add for some more ideas that the exchange rate will have impacts on the economic growth through 2 mains effects: the income effects (for instance, the decrease of domestic currency will increase the input cost of import, the producers may reduce the labor cost to manage this problem, so the disposible income is decreased that reduce the private consumption and also even private investment and then the economic growth), or the substitutional effects (which the exchange rate impacts on the export and import activities of tradeble products, a decrease of domestic currency will increase the competitiveness of domestic product on the international market through the relative cheaper price thus the trade balance is better and then the economic growth).

These two effects are depended on the economic characteristic of each country for stronger or weakier.

Best

Canh

Dear Canh.

Thanks for those new ideas. The flexible exchange rate regime obviously has an impact on development. But this impact is it just positive?

It was found that some heavily indebted countries, have an extreme fear of playing their exchange rate instrument, even when the internal economic situation requires to do it.

 If you do not have much to sell, or if you only have a few raw materials, what is the use of the exchange rate of weapon? If your population is under educated and can not produce quality goods, even giving it for free you may have no takers for the goods you manufacture.

Is it not qualifications acquired through a strong educational system adapted to your environment that creates competitiveness and not the manipulation of  the exchange rate?  Trade balances of two partner countries can not be in surplus simultaneously. If you press the trigger of the exchange rate weapon at the same time, exports may not move. If you fixe the exchange rate while crossing arms, the situation could become catastrophic.

Dear Pro Jean

i totally agree with you that if government faces to very difficultty situation in the case of low development and free exchange rate

in my own opinion, we have to look at other determinents of economic growth in the line with managing the exchange rate by limit the trade openness (which is strange ideas, but studies have proved that trade openness not always benefit for a country with low compititiveness). I mean that we can not just reply on exchange rate to improve our compititaveness of our products (other countries can against us by this weapon)

so, a country or a government must begin with their institutions through their policies (fiscal and monetary policies) to boost the productivities through human capital (education and better environment for innovations), accumulated capital (more saving and develop financial system to transfer this saving), and boost technology

of course, we have to sacrify many years with many generations for living poor and keep saving their money for growth before thinking about open more to the world. We can not to be rich in one night

Best

Canh

I started working on a paper in mid-February (concerning Mongolian Foreign Exchange) through which I discovered an extraordinarily high correlation between the 90-day average price of the minerals: Cu, Au, and Ag and the ForEx rate 90 days hence. The correlation began precisely with the start of operations at Mongolia's largest copper mine, Oyu Tolgoi (OT) (Jan 2013), and has continued unabated since then. I suspect someone is running a volume of forward contracts for sale of mineral in tandem with swaps; and that this may actually be controlling Mongolia ForEx rates.

I attached a graphic reflecting three curves: 1) the actual spot rate at date; 2) the 90-day forward forecast derived from a regression formula based on 90-day average gold price; and 3) the 90-day forward forecast derived from a regression formula based on 90-day average copper, gold, and silver prices. (The legend will identify each curve.)

The draft paper here: https://www.academia.edu/23352856/Mongolia_Foreign_Exchange_Tied_to_a_Gold_Standard

or here: http://www.slideshare.net/LMBeharry/2016-0307-mntfxpaper

lmb

https://digitalcommons.iwu.edu/cgi/viewcontent.cgi?article=1350&context=uer

Combining exchange rate policies with other types of industrial policies may transform the comparative advantage of economies, with positive effects on economic development.