Upgrading Export Structure In Sub-Saharan Africa

Abstract

A major focus of research on trade policy reform relates to whether changes in global economic participation, brought about by such reform, provides for sustainable income growth in the countries concerned. The challenge for many African economies in this context is to improve their position in the global economy by upgrading their export structures. The authors empirical work suggests that export diversification is a critical first step in upgrading export structure in Sub-Saharan African (SSA) countries. The authors find that the knowledge gained from the export diversification process, along with technology spillovers associated with FDI flows, are important drivers. Furthermore, they find evidence of learning by doing productivity gains from SSA exporting activity. On the whole, the authors do not find that the rise of Asian driver economies poses a significant threat to SSA export sophistication. What is crucial to the further success of SSA countries upgrading their export structure is government policy initiatives that prioritise the upgrading of infrastructure, human capital development and institutional reform. These efforts will ensure that SSA countries can realise real economic gains through improvements in their export structures rather than locking their economies into commodity dependence on the basis of their favourable natural resource endowments.