National-level innovation in Africa

Abstract

Why are some African nations moving ahead in innovation? We develop seven hypotheses for what determines national-level innovation in Africa using seven well established lines of argumentation grouped into two distinct policy areas: international and domestic. The international policy areas are trade arrangements (benefits from economic integration), export specialization (resource curse problem) and inward migration (social capital spillovers). The domestic policy areas are education (investment in human capital), control of corruption (institutional quality), financial inclusion (‘reaching the unbanked’) and internet usage (closing the digital divide). Testing these hypotheses on a unique dataset collated from diverse secondary sources and representing up to 39 African countries, we find that trade arrangements and financial inclusion are the most consistent predictors while the remaining arguments find inconsistent or no support. Exploratory analysis reveals two pathways to innovation in Africa: one internationally oriented, based on trade arrangements for relatively poorer countries, and the other domestically oriented, based on financial inclusion for relatively higher-income countries. The relevance of our findings for policy makers and research is discussed.