Effects of the Quality of Institutions on the Economic Diversification of the States of the Economic and Monetary Community of Central Africa (CEMAC)

Abstract

The objective of this paper is to analyze the effects of the quality of institutions on the economic diversification of the countries of the Economic and Monetary Community of Central African States (CEMAC). The panel data used cover the period 1995-2019 and are extracted from the UNCTAD, WGI and WDI databases of the World Bank. The econometric analysis of the panel data, using the Pooled Mean Group (PMG) technique, shows that two variables are significant in the short term: corruption control for Congo and political stability for Equatorial Guinea. In the long term, corruption control has a positive impact on economic diversification, while political stability has a negative effect on economic diversification. The results imply that 1) the leaders of CEMAC countries should ensure political stability by adding a measure of good governance to improve economic diversification, and 2) through the fight against corruption, the public authorities should adopt rational frameworks that enable them to effectively strengthen economic diversification.