The other major area in which new economic policies for diversification are required is in research. The majority of African countries, since the demise of diversification gain resorted to relying on factor accumulation as the main source of economic growth. Yet, historical and empirical evidence has shown that the industrialized and NIEs were able to achieve development leaps when dramatic changes in TFP took place. As this report has shown, a link exists between economic growth and diversification through TFP. However, improvements in TFP are almost always a manifestation of innovation in a given economy. Financing research and development stands out as a clear way in which African countries could improve the level of innovation and hence raise the level of TFP contribution to economic growth. This would then enable these countries to reap maximum benefits from their diversification efforts.
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