Abstract
Background: Using a concept of revealed and latent comparative advantage, this article identifies relatively productive industries and industries with great potential in the slow-growing economy of Senegal. The identification of such industries allows for economic structure adjustment resulting in a higher gross domestic product (GDP) growth rate.Aim: The aim of the study is to identify Senegalese long-term revealed comparative advantages and to estimate Senegalese latent comparative advantages. The analysis is focused solely on manufacturing industries because industrialisation serves as an engine of growth in developing countries.Setting: The analysis is carried out on endowment structure and international trade data (1995–2015) of Senegal and appropriate comparator economies (Tanzania, Cambodia, Lao, Vietnam and Cape Verde).Methods: To identify revealed comparative advantages, we calculate the normalised revealed comparative advantage index. To estimate latent comparative advantages, we employ a growth identification and facilitation framework. The methodology is slightly modified because the estimation is based on long-term revealed comparative advantages comparisons (rather than export shares comparisons).Results: We argue that the relatively productive manufacturing industries (with revealed comparative advantage) include chemicals and manufactured goods classified chiefly by various materials. Furthermore, Senegal may have unexploited potential (i.e. latent comparative advantage) in footwear and particularly in apparel production.Conclusion: In order to accelerate GDP growth rate, Senegal should focus on developing the above mentioned industries to align its economic structure with the comparative advantages and also to promote industrialisation.
Highlights
Many sub-Saharan economies have been struggling to achieve and maintain high growth rates for a long period of time
We apply a concept of revealed and latent comparative advantage (LCA) to identify productive industries and industries with great potential in the Senegalese economy. Identification of those industries may help to adopt a comparative advantage following approach, as Lin (2012) puts it, which basically means aligning an economic structure with comparative advantages to achieve a higher gross domestic product (GDP) growth rate
This paper focuses on normalised revealed comparative advantage index (NI), which patterns on the more common Balassa’s revealed comparative advantage index (BI)
Summary
Many sub-Saharan economies have been struggling to achieve and maintain high growth rates for a long period of time. We apply a concept of revealed and latent comparative advantage (LCA) to identify productive industries and industries with great potential in the Senegalese economy. Identification of those industries may help to adopt a comparative advantage following approach, as Lin (2012) puts it, which basically means aligning an economic structure with comparative advantages to achieve a higher gross domestic product (GDP) growth rate. Using a concept of revealed and latent comparative advantage, this article identifies relatively productive industries and industries with great potential in the slowgrowing economy of Senegal The identification of such industries allows for economic structure adjustment resulting in a higher gross domestic product (GDP) growth rate
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