Abstract
This study aims to answer the question of whether investments have an effect on the economic diversification of the countries of the Economic and Monetary Community of Central Africa (CEMAC). The panel data used cover the period 1995-2019 and are extracted from the UNCTAD, WGI and WDI databases of the World Bank. To address the research question, we used panel data econometrics. The results obtained show that private investment improves economic diversification, while public investment hinders economic diversification in the CEMAC. These results imply 1) the need to enhance the attractiveness of private investment in all sectors of the economy and 2) the importance of improving state governance through a shift from the rentier to the developmental state.
Highlights
The debate on economic diversification has seen renewed interest in commodity-exporting countries
In the context of the CEMAC, the objective of this paper was to analyze the effects of investment on economic diversification using an econometric methodology
The results obtained show that private investment has a positive effect on export diversification, improving economic diversification
Summary
The debate on economic diversification has seen renewed interest in commodity-exporting countries. This interest is justified by the volatility of oil barrel prices in recent years, which has led to a decline in oil export revenues of nearly 32 percent in CEMAC countries, IMF (2016). This situation has led several international organizations to recommend that CEMAC states diversify their exports. Others have focused on the economic factors, such as investment, that determine the success of diversification. Several authors have shown the positive effects of public investment on economic diversification (Liu and Shu, 2003; Ndjambou, 2011)
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