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5.0 Diversification and Growth: Economic Report on Africa 2007

Written by: United Nations Economic Commission for Africa

Article Overview: 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.

5.0 Diversification and Growth: Economic Report on Africa 2007

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.

Related Articles
  4.0 Diversification trends in Africa: Economic Report on Africa 2007
  5.2 Growth, productivity and diversification: Economic Report on Africa 2007
  4.4 References: Economic Report on Africa 2007
  5.4 References: Economic Report on Africa 2007
  6.5 Financing research to increase TFP: Economic Report on Africa 2007

Article Tags: africa asia, breakthrough, determinants, development outcomes, diversification efforts, economic growth rates, empirical evidence, factor productivity, growth and development, institutional factors, international trade, latin america, motivation, policy instruments, policy options, puzzle, regimes, regional differences, specialization, tfp growth



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