So, there is a link between growth and diversification via the TFP as the transmission path in Africa. How does this link relate to the diversification regimes that have been seen to characterize African economies? Is there a clear correlation between the diversification regimes and the TFP contribution to growth? To answer these questions, analysis of the sources of growth of a few African countries is related to the different diversification regimes.
The first diversification regime was described as those countries with little economic diversification. The study found that many African countries belong to this regime, including Benin, Burkina Faso, and Malawi. It can be observed from table A5.4 that these countries have positive growth on average for the period 1981-2000. Benin, Burkina Faso and Malawi have average annual growth rates of 3.8 per cent, 3.7 per cent and 3.0 per cent, respectively. The main source of growth is the factor accumulation rather than the TFP. However, it is interesting to note that the contribution of productivity to growth in these countries is positive in almost all but one period, even though they have not diversified much. However, even though growth in these countries was positive over the 20-year period under observation, their growth rates were not on the level at which their economies could take off, as compared to the high growth-performing economies of the NIEs in East Asia.
The second regime comprised those countries that started the process of diversification but did not make any significant breakthroughs. From table A5.4, the examples of these countries are Kenya, Senegal and Zimbabwe. It may be observed that all three countries have shown a slowing-down trend in production during the period 1981-2000, except for Senegal, which recovered during 1996-2000. However, the growth trends are positive despite the setbacks. Kenya grew at an annual average of 2.9 per cent; Senegal at 3.3 per cent while Zimbabwe was growing at 3.1 per cent.
Again, the main source of growth was factor accumulation rather than TFP. It is noted, however, that the average TFP contribution to growth in Senegal and Zimbabwe is positive. The main question is, could it be that these countries experienced slackening of growth because they failed to deepen their diversification process and have remained at the same level for a long time?
The third regime is that of countries with a deepened diversification process. Countries such as Mauritius, Morocco, South Africa and Tunisia exemplify this regime.
Tunisia has managed to achieve horizontal diversification into higher-value exports.
Mauritius, on the other hand, has achieved deep vertical diversification, which has led to more textiles-related exports. The countries in this regime are characterized by relatively high growth, except South Africa, whose growth has since picked up with the dawn of a new political dispensation. Mauritius and Tunisia in particular have registered growth rates of 5.5 per cent and 4 per cent per annum on average, respectively, for the period 1981-2000. In both these countries, it may be observed that the contribution of capital is much higher than the contribution of labour.
Moreover, in Mauritius, the TFP contribution to economic growth is positive with an annual average of 2 per cent, a relatively high figure for an African country.
The fourth regime is composed of countries that registered early positive diversification gains but later tended to specialize in a few products. Countries such as Gabon and Nigeria exemplify this regime. These countries are both rich in oil; hence, this product dominates their exports. As for their growth performance, the GDP growth rates of both countries, although mostly positive, were characterized by fluctuations over the period 1981-2000. On average, Nigeria is growing at 2 per cent per annum while Gabon is growing at 2.3 per cent per annum. As with most of the African economies, their economies are also labour-intensive with a minimal TFP contribution.
Nigeria’s TFP contribution to growth, on average, is even negative for the period under study. The economic growth of countries in this regime is relatively low compared to such countries in the third regime as Mauritius and Tunisia.
The fifth group comprises those countries within the conflict and post-conflict regime. The countries that belong to this regime are neither diversified nor highly specialized. Examples are DRC and Liberia. Economic growth in these countries was stunted by wars and conflicts and can therefore be expected to be negative.
Consequently, the contribution of TFP to their economic growth is also negative.
These countries depend a great deal on their labour force for production as the contribution of capital to growth is also deteriorating.
To learn more about this author, visit United Nations Economic Commission for Africa's Website.
Like this article? Share it with your friends
 |
Related Businesses - Evan Elite Authors |
|
The Evan Elite Authors program is currently in beta phase. For details please contact us.
|
|
|
United Nations Economic Commission for Africa's
Complete
List Of
African-Accounts
Articles
|
|
If you enjoyed this article, get United Nations Economic Commission for Africa's Complete List of African-Accounts Articles For FREE!
|
|
|
|
![[Get Copyright Permissions]](http://license.icopyright.net/images/icopy-w.gif){kind=small}
