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Determinants of export diversification in Sub-Sahara African region: a fractionalized logit estimation model

Author

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  • Dobdinga Cletus Fonchamnyo

    (University of Buea)

  • Afuge Ramsy Akame

    (University of Buea)

Abstract

The paper uses panel data of 32 countries from 1995 to 2013 to investigate the determinants of export diversification in Sub Saharan Africa (SSA). As opposed to previous studies on determinants of export diversification, the empirical model was estimated using the fractionalized logit technique based on the fact that the dependent variable (Herfindahl-Hirschman Concentration Index) is fractional. The average statistics clearly showed that among the countries used in this study, the most diversified economies are South Africa (0.14), Kenya (0.22) and Tanzania (0.22), while the most concentrated are Angola (0.92), Nigeria (0.85) and Chad (0.80). The results of our empirical analysis revealed that overall export diversification is significantly promoted and determined by trade openness, value added in agriculture, value added in manufacturing and foreign direct investment; while GDP per capita was a significant deterrent to export diversification in this region. Other results showed that foreign aid, official exchange rate and gross domestic investment were insignificant determinants of export diversification in the selected economies. Our results therefore suggest that to foster export diversification in the Sub Saharan Africa region, it is imperative to promote regulatory reform efforts that facilitates international trade, improve foreign direct investment and promote infrastructural development and performance in the agricultural and industrial sectors.

Suggested Citation

  • Dobdinga Cletus Fonchamnyo & Afuge Ramsy Akame, 2017. "Determinants of export diversification in Sub-Sahara African region: a fractionalized logit estimation model," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 41(2), pages 330-342, April.
    • Handle: RePEc:spr:jecfin:v:41:y:2017:i:2:d:10.1007_s12197-016-9352-z
    DOI: 10.1007/s12197-016-9352-z
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    Cited by:

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    3. Gnangnon, Sèna Kimm, 2020. "Aid for Trade and Services Export Diversification in Recipient-Countries," EconStor Preprints 210467, ZBW - Leibniz Information Centre for Economics.
    4. Swathi. M & P. Sridharan, 2022. "Determinants of Export Diversification: Evidence from Fractional Logit Estimation Model," Foreign Trade Review, , vol. 57(2), pages 160-177, May.
    5. Simplice A. Asongu & Thales P. Yapatake Kossele & Joseph Nnanna, 2021. "Not all that glitters is gold: political stability and trade in Sub-Saharan Africa," Research Africa Network Working Papers 21/005, Research Africa Network (RAN).
    6. Sabna Ali & Syed Mansoob Murshed & Elissaios Papyrakis, 2023. "Oil, export diversification and economic growth in Sudan: evidence from a VAR model," Mineral Economics, Springer;Raw Materials Group (RMG);Luleå University of Technology, vol. 36(1), pages 77-96, January.
    7. Elena L. Andreeva & Dmitriy A. Karkh & Artem V. Ratner, 2020. "A regional dimension of the Russian export: Assessment of spatial and sectoral differentiation," Journal of New Economy, Ural State University of Economics, vol. 21(2), pages 60-75, July.
    8. Tiblets Nguse & Betgilu Oshora & Maria Fekete-Farkas & Anita Tangl & Goshu Desalegn, 2021. "Does the Exchange Rate and Its Volatility Matter for International Trade in Ethiopia?," JRFM, MDPI, vol. 14(12), pages 1-18, December.
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    More about this item

    Keywords

    Export diversification; Fractionalized logit; SSA;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • L6 - Industrial Organization - - Industry Studies: Manufacturing
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development

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