Analysing the various diversification indices and the structure of the top ten export commodities for selected countries over the last two decades and a half provides some useful insights which can be used to define diversification regimes that characterize Africa. Five diversification regimes can be identified from Africa’s experience (see Ben Hammouda et al. 2006b). These regimes should not be viewed as steps or as a continuum that a country must follow as it moves from a concentrated to a diversified economy. Rather, the regimes are a result of the policy actions that a country has set in place over a given period of time. The particular regime that a country falls into is likely to be the result of a mix among the various diversification determinants. The five regimes that can be identified in Africa’s diversification efforts are summarized below:
• Little economic diversification: The countries exhibiting this regime are those that have not achieved much in terms of diversification. These are countries which, without experiencing any conflict, have been unable to achieve any significant diversification gains. Bénin, Burkina Faso, and Malawi exemplify countries that exhibit this regime.
• Countries that started the process but have not made any significant breakthrough: The second regime that is evident in the African experience characterizes those countries that have not made major breakthroughs in their diversification efforts over the last 20 years. Even though such countries are among the more diversified on the continent, they have not managed to achieve deep horizontal diversification that encompasses high-value export commodities. Vertical diversification might have occurred leading to new agriculture related exports as is the case in Kenya. However, the vertical diversification is still not based on the higher-valued exports that have been characteristic of the Asian NIEs and Latin American countries.
• Deepened diversification process: A strengthened diversification regime is one that has the potential to be sustainable. This is a regime that is characterized by both horizontal and vertical diversification. Examples include Mauritius and Tunisia. Tunisia has managed to achieve horizontal diversification into higher-value exports (box 4.3). Mauritius, on the other hand, has achieved deep vertical diversification, which has led to more textilesrelated exports.
• Backsliders in the diversification process: The fourth regime characterizes those countries that started well and were registering positive diversification gains but later fell back. It covers countries that, after the economic crises of the early 1980s, concentrated on an internal focus. The Dutch Disease effects might have played a major part in putting the countries under this regime. In the majority of the cases, export booms based on a single commodity played a part in the diversion of factors of production away from other tradables, especially the exportables. Gabon and Nigeria were unable to follow the strategy that Tunisia adopted, whereby the traditionality of petroleum-related exports continued but new sectors were able to emerge and thrive.
• Conflict and post-conflict countries: The fifth regime in this characterization of African economies includes conflict and post-conflict countries. The Democratic Republic of Congo, Liberia and countries in similar conditions exhibit diversification efforts but conflict has undermined these efforts.
To learn more about this author, visit United Nations Economic Commission for Africa's Website.
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