Dynamics of Product Complexity in Africa: Structural Estimation Using Structuralists Model

Abstract

Applying the linear LAS (Latin American Structuralists) technological intensity model in Africa, this paper presents African nations are still diversifying their outputs towards the ubiquitous (fewer complexes) products. Put it simple, using the economic complexity index of Africa (explanatory variable) as a proxy for the technological intensity in Africa and per capita GDP gap (explanatory variable) as a proxy for technology gap, the paper presents a significant and positive relationship between economic complexity index of Africa and the time derivative of the economic complexity index of Africa (the explained variable). This implies that “weak” effort African nations exerted so far in diversifying their outputs towards the less ubiquitous commodities and absence of “automatic catch up tendency” (unlike what is presupposed by the mainstream neo-classical growth models). The linear panel data regression is employed on sample of 23 African economies and OECD member economies for the period 1996-2014.