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4.1 Case studies on export diversification for selected African countries: Economic Report on Africa 2007

 
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4.1 Case studies on export diversification for selected African countries: Economic Report on Africa 2007
   

So far, diversification trends in relation to African economies indicate that different countries have achieved varying results. The overall conclusion is that, in general, African economies have failed to make gains beyond their initial positions in the early 1980s. It has also been pointed out that they reacted defensively to the crises that beset them in the 1980s. Their macroeconomic stabilization policies did not create an environment conducive for dynamic response, as a good number of countries in Asia and Latin America were able to do. Their defensive response as seen in the oil factor, perpetuated the status quo and worsened it in some instances. Earlier gains in such countries as Gabon, Nigeria and Sudan were eroded.

In this sub-section, selected results on the different outcomes of various national economic diversification efforts are discussed. The evidence on how some of the countries have responded is based on the cumulative export experience function.

The cumulative export experiences of the top ten commodities are employed to make the point that export diversification in Africa has been varied. Most countries have not managed to break out of their traditional exports to more dynamic nontraditional sectors with higher export-earning potential.

The interpretation of the cumulative export experience function is as follows. For two different industries whose cumulative export experience functions are plotted together, the industry whose exports were concentrated earlier would have its functions further to the left. The sectors whose export experiences functions were concentrated earlier are the ones normally referred to as traditional. Those sectors whose export experience function is concentrated later in a given sample period are often referred to as non-traditional industries. Increasing numbers of industries that are concentrated in later years are indicative of a national efforts to break away from over-reliance on more traditional exports. The more the number of sectors with cumulative export experience functions shifted to the right, the more the indication of some dynamism in new export developments.

Case 1 - Mauritius Figure 4.5 presents the cumulative export experience of Mauritius, one of the more diversified African economies. In the Mauritius case, the more traditional sectors are sugar and honey, knitted outer garments; and watches and clocks, with the larger part of the export development occurring early in the 22-year period under consideration. On the other hand, Mauritius has managed to develop non-traditional export sectors. These include fish, woven cotton fabrics, knitted undergarments, and non-knitted women’s outerwear. These are sectors whose export experience have been developed in more recent years. That the last three of the export categories named above are related to the textiles and apparel sector could also be an indication of some vertical diversification.

Case 2 – Kenya The Kenyan experience does not differ much from the experience of Mauritius (figure 4.6). However, the range of experiences in the different sectors are more pronounced.

Kenya is also one of the more diversified economies (box 4.2). However, it is evident that the top ten commodities have not broken into the range of manufactured products where there is generally evidence of more dynamism. The most traditional sector is coffee.

Iron and steel are also showing strong indications of becoming more traditional exports.

As for the non-traditional industries, Kenya has managed to attain strong real growth in recent years in export of vegetables in particular. Very interestingly, exports of petroleum products indicate that this industry is also becoming more traditional in nature.

Case 3 – Tunisia The Tunisian diversification experience indicates significant horizontal diversification in exports (see figure 4.7). Tunisia’s top ten products include garments such as knitted non-elastic outer garments, non-knitted men and women’s outerwear, and knitted under garments. The others include switchgear and electricity distributing equipment. These products indicate greater export experience in recent years and are the emerging or newer products in the export mix. On the other hand, manufactured fertilizers and inorganic chemical elements, oxides and others have not registered any significant structural changes for 24 years. It is noteworthy that crude petroleum, which is a traditional product, has witnessed a decline in its share of exports from 50 per cent at the beginning of the period to about 7 per cent of total exports in 2002.

Case 4 - Nigeria The Nigerian experience described in figure 4.8 provides a distinct feature associated with the oil factor. Nigeria’s top export products include seed for other fixed oils, leather, cocoa, shellfish fresh and frozen, natural rubber and gums, petroleum products refined and special transactions. These traditional export products decreased their share in the country’s total exports around the mid-1980s, as crude petroleum became the dominant export product from Nigeria. Since 1987, the share of crude petroleum export has risen to almost 95 per cent of total exports, maintained this level and then again increased to over 99 per cent in 2000. Other products such as ships and boats, and polymerization products do not have a steady direction. They were not among the traditional exports but there are periods when their exports were very high. Finally, in the late 1990s, these two products were actually dominated by exports of crude petroleum. To learn more about this author, visit United Nations Economic Commission for Africa's Website.

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United Nations Economic Commission for Africa
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The United Nations Economic Commission for Africa (ECA) is the regional arm of the United Nations, mandated to support the economic and social development of its member States, foster intra-regional integration, and promote international cooperation for Africa's development.
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