An Empirical Analysis of Dynamic Competitiveness in Africa

Abstract

Specializing in the export of products made intensively from relatively abundant factors of production and in the import of those made from relatively scarce ones has had a lot of traction in international trade practice. Ample evidence, however, now shows that some nations are gaining a comparative advantage in new areas that they never had before. Consequently, the traditional policy option of many African countries of continuing to specialize in areas in which they already have a comparative advantage (such as exports of primary commodities) is complemented with that of moving to new areas (such as high technology manufacturing) in which they could gain some advantage even though they may not enjoy any at the moment. Trade strategies are therefore now being formulated specifically to transition economies from a state of non-competitiveness to a state of relative competitiveness. This transitioning is what we call dynamic competitiveness in this paper. Empirically, we determine this by analysing the growth of the World Economic Forum’s Global Competitiveness Index of 27 African countries. This is complemented with the analysis of the growth of trade and transport costs using the World Bank Doing Business data. The study finds, among others, that even though the selected Sub-Saharan African countries are improving their (static) competitiveness over time, they cannot be said to be achieving dynamic competitiveness.