The presentation in the previous chapter has painted a varied picture of the results of Africa’s efforts to diversify its economies. At the same time, regional differences between Africa, Asia and Latin America were compared. The question then becomes why some countries or regions achieved breakthrough in their diversification efforts while others did not? Identifying the determinants of diversification is one part of solving this puzzle. Linking these policy instruments to growth and development outcomes through growth is the other part of the puzzle. This chapter is about fitting both parts of the puzzle together.
In discussing the empirical evidence on determinants of diversification for Africa, the underlying motivation is to deepen diversification through the use of appropriate policies. The policy options open could be economic or non-economic. In this regard, the presentation emphasizes physical, policy, macroeconomic and institutional factors that influence diversification outcomes. Those that could deepen diversification are separated from the policy options which, rather than deepening diversification, lead to specialization.
The second part of the chapter addresses the second part of the puzzle. It focuses on the evidence that links diversification to economic growth. Through total factor productivity (TFP) growth, countries will be able to deepen international trade capacity, but also significantly reduce poverty by raising their economic growth rates. The chapter concludes by tying national diversification regimes to the established link between diversification and economic growth.
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