Export Diversification Journal. A Tool for Economic Growth. A Case Study of Selected Sub-Saharan African Countries

Okpara Ikechukwu John ,Iloka Chinenye Ebele

doi:10.7176/jesd/10-21-07

Abstract

Export diversification was highlighted by the works of Hesse, 2008 and strauss-khan, 2011 by stating the importance of it. And they stated that an increase in export diversification will lead to increase in the gross domestic product of countries. Though, previous studies have shown that less developed nations likes those in Africa concentrate more on the export of single product which in most instances does not favour them. This is further understood by the report from the United Nations Conference on Trade and Development (UNCTAD) which reflects that the level of export concentration by the less developed nation leads to unstable/ lopsided way of growth. Sources of major revenue for some developing nations are derived from the production, sales and export of primary products. This makes them experience distortions in economic plans because of the irregularities in the world demand for goods and services.This work brings to light the importance and need for export diversification and some countries like; Angola, Cameroon, Mauritius, Namibia, Nigeria and South-Africa were studied between 1995-2015 using indices like exchange rate, labour force, export of goods and services and gross capital formation which were studied and analyzed to determine the impact of export diversification on GDP per-capita growth in these selected countries on one part and to determine the impact of export diversification on the terms of trade of these countries selected. Results from the SUR regression that was run revealed that there exists a linear relationship between the dependent and independent variables of the cross-sectional entities/ units. The result of the Johansen normalization test also revealed/indicated that the independent variables (exchange rate, export of goods and services and gross capital formation) are all positively related to the dependent variable (gross domestic product). From the outcome, export diversification seems to best suit developing nations especially those that are focused in this study. Keywords: Export Diversification, Export Concentration, Exchange Rate, Gross Capital Formation, SUR (Seemingly Unrelated Regression), Labour Force. DOI : 10.7176/JESD/10-21-07 Publication date: November 30 th 2019

Highlights

Most developing countries in sub-saharan Africa get their revenues from exports of primary products that is why they experience fluctuations in their incomes and this is partly true because the world demand for primary products are irregular
Just like in the past crude oil production and concentration in export was seen as dutch disease in Holland and a resource curse because of the fluctuations in development and vulnerability of those export concentrated countries that is caused by shocks in the price of the product in the international market
The study of the variables used in this work, its application through seemingly unrelated regression (SUR) and the result derived revealed that increase in export diversification tends to improve the economy as explained by Nouira Plane and Sekkat, (2009) that regular variations in the prices of primary goods and barrier to trade internationally disorganizes/distorts planned economic activities that is why export diversification on secondary products is mostly proposed for developing economies like the sub-saharan African countries under focus

Summary

Introduction

Most developing countries in sub-saharan Africa get their revenues from exports of primary products that is why they experience fluctuations in their incomes and this is partly true because the world demand for primary products are irregular. Export diversification in sub-saharan Africa has been seen to be a way of moving countries towards economic growth.

Results

Conclusion