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Foreign Aid, Resources and Export Diversification in Africa: A New Test of Existing Theories

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  • Osakwe, Patrick N.

Abstract

Recent theoretical literature suggests that aid, geography, and resource endowments affect diversification of exports in Africa. This paper examines the validity of these popular views using a System-GMM methodology and panel data for African countries. The evidence suggests that aid, the quality of infrastructure, and resource endowments are robust determinants of diversification in Africa. It also suggests that there is no systematic relationship between geography and diversification. Furthermore, there is some evidence that institutional factors are important although it is not robust. Finally, the paper offers recommendations on how to promote export diversification in the region.

Suggested Citation

  • Osakwe, Patrick N., 2007. "Foreign Aid, Resources and Export Diversification in Africa: A New Test of Existing Theories," MPRA Paper 2228, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:2228
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    File URL: https://mpra.ub.uni-muenchen.de/2228/1/MPRA_paper_2228.pdf
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    References listed on IDEAS

    as
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    12. Rodrik, Dani, 2005. "Policies for economic diversification," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), December.
    13. Wood, Adrian & Mayer, Jorg, 2001. "Africa's Export Structure in a Comparative Perspective," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 25(3), pages 369-394, May.
    14. Manuel Arellano & Stephen Bond, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 58(2), pages 277-297.
    15. Chang, P. H. Kevin, 1991. "Export diversification and international debt under terms-of-trade uncertainty : An intertemporal approach," Journal of Development Economics, Elsevier, vol. 36(2), pages 259-277, October.
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    Cited by:

    1. Jonathan Munemo, 2011. "Foreign aid and export diversification in developing countries," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 20(3), pages 339-355.
    2. Sèna Kimm Gnangnon, 2021. "Development aid and services export diversification," International Journal of Economic Policy Studies, Springer, vol. 15(1), pages 125-156, February.
    3. Marinov, Eduard, 2014. "Регионална Икономическа Интеграция В Африка (Дисертация) [Regional Economic Integration in Africa (Ph.D. Thesis, full text)]," MPRA Paper 60591, University Library of Munich, Germany.
    4. Philip Ifeakachukwu Nwosa & Akinyemi Alao Ajibola, 2018. "Monetary Policy and Export Diversification in Nigeria," Valahian Journal of Economic Studies, Sciendo, vol. 9(1), pages 17-28, April.
    5. Foster-McGregor, Neil & Kaba, Ibrahima & Szirmai, Adam, 2015. "Structural change and the ability to sustain growth," MERIT Working Papers 2015-048, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    6. Dorra Ellouze & Khadija Mnasri, 2020. "Business group diversification, financial constraints and firm performance: the case of Tunisian group affiliated firms," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 24(1), pages 273-301, March.
    7. Amighini, Alessia & Sanfilippo, Marco, 2014. "Impact of South–South FDI and Trade on the Export Upgrading of African Economies," World Development, Elsevier, vol. 64(C), pages 1-17.
    8. Gnangnon, Sèna Kimm & Roberts, Michael, 2015. "Aid for trade, foreign direct investment and export upgrading in recipient countries," WTO Staff Working Papers ERSD-2015-10, World Trade Organization (WTO), Economic Research and Statistics Division.
    9. Eduard Marinov, 2013. "International trade commodity structure of African regional integration communities (English)," Economic Thought journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 4, pages 135-151.
    10. Sèna Kimm Gnangnon & Michael Roberts, 2017. "Aid for Trade, Foreign Direct Investment and Export Upgrading in Recipient Countries," Journal of International Commerce, Economics and Policy (JICEP), World Scientific Publishing Co. Pte. Ltd., vol. 8(02), pages 1-36, June.
    11. Wim Naudé & Riaan Rossouw, 2008. "Export Diversification and Specialization in South Africa: Extent and Impact," WIDER Working Paper Series RP2008-93, World Institute for Development Economic Research (UNU-WIDER).
    12. Kivilcim Metin Özcan & Nur Sevim Kafali, 2007. "The Structure of the Turkish Banking Sector After the 2000-2001 Crisis: An Empirical Investigation," Working Papers 709, Economic Research Forum, revised 01 Jan 2007.
    13. Sujan Piya & Akira Kiminami & Hironori Yagi, 2010. "Evaluating the Impact of Geographic Concentration on Nepalese Agricultural Export," South Asia Economic Journal, Institute of Policy Studies of Sri Lanka, vol. 11(2), pages 207-222, September.
    14. Ndambendia, Houdou, 2014. "Exports diversification and knowledge sharing from south-south and south-north economic cooperation: evidence from the Central and West Africa," MPRA Paper 71571, University Library of Munich, Germany, revised 2015.
    15. Romero-Ávila, Diego, 2009. "Multiple Breaks, Terms of Trade Shocks and the Unit-Root Hypothesis for African Per Capita Real GDP," World Development, Elsevier, vol. 37(6), pages 1051-1068, June.

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    More about this item

    Keywords

    Exports; Aid; Diversification; Africa; Endowments;
    All these keywords.

    JEL classification:

    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F35 - International Economics - - International Finance - - - Foreign Aid

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