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Guest post by: United Nations Economic Commission for Africa Become an Author

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For new macroeconomic and economic policies to achieve optimal diversification
results, it is important for countries to strengthen their institutions. As this report
has shown, conflict and governance have very substantial implications for diversification.
Conflict always undermines diversification, while good governance (broadly
defined) is empirically shown to lead to desirable diversification results. The policy
recommendation that flows from these results is that it is important that countries
invest in peace-building and peace-promoting institutions that can proactively deal
with threats of conflict flare-up or resurgence.

Where conflict exists, be it at the national level or across borders between countries
in a given subregion, it is important to have effective institutions to address prevention
or resolution. Having conflict prevention and resolution as a key feature
of institutions within the RECs is one way in which diversification efforts could
be deepened. Countries that aim to deepen diversification also need to invest in
good governance structures and institutions. Governance institutions that have to be
strengthened should cut across the rule of law and public order – including a judiciary
that effectively deals with commercial disputes, as well as tax administration
institutions that establish a predictable investment climate.

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