卡内基国际和平基金会-Economic-Diversification-in-Africa-How-and-Why-It-Matters_41页_1mb

Economic Diversification in Africa: How and Why It Matters

Core Content

Economic diversification is a critical policy objective for low- and middle-income economies, particularly in Africa, where many countries remain highly dependent on a narrow range of commodities. The paper emphasizes the importance of diversification in promoting economic growth, resilience, and development, especially in the face of external shocks such as the pandemic. It also highlights the need for a more comprehensive understanding of the various dimensions of economic diversification, including GDP diversification, export diversification, and fiscal diversification.

Main Dimensions of Economic Diversification

1. GDP Diversification

   • Refers to the expansion of economic sectors contributing to employment and production.
   • Often linked to structural transformation, moving from low-productivity sectors like agriculture to higher-productivity sectors such as industry and services.
   • Involves a decline in the share of agriculture in the economy and an increase in the relative value added of other sectors.

2. Export Diversification

   • Focuses on the range of goods and services a country exports.
   • Moves from exporting raw materials (e.g., oil, minerals) to manufactured goods and services.
   • Also involves expanding the number of trading partners.
   • Linked to participation in global value chains and enhanced competitiveness.

3. Fiscal Diversification

   • Involves expanding government revenue sources and public expenditure targets.
   • Emphasizes reducing dependence on extractive industries and increasing sustainable domestic revenue mobilization.
   • Includes broadening the tax base, improving tax instruments, and enhancing the efficiency of public spending.

How Economic Diversification Is Measured

• Theil Index: Widely used by economists to measure export diversification. It can also be applied to assess fiscal diversification.
• PEFA Framework: Used by development practitioners to evaluate public financial management (PFM) performance, which has implications for fiscal diversification.
• Challenges in Measurement: While GDP and export diversification are relatively well-measured, fiscal diversification requires more detailed data on government revenue collection and spending, and how these align with policy goals.

Why Dimensions and Measures of Diversification Matter

• Resilience: Diversification helps economies withstand external shocks, such as commodity price fluctuations and pandemics.
• Growth: Diversification is associated with productivity gains, industrial upgrading, and better-paying jobs.
• Institutional Development: Fiscal diversification can improve governance and reduce corruption, especially when revenue is collected from a broader base and used for public goods.
• Spatial Inequality: Economic diversification is not uniform across African countries. Some regions, particularly coastal areas, are more diversified than inland areas, which are dominated by subsistence farming.
• Income Levels and Natural Resources: Low-income countries and those dependent on nonrenewable resources tend to be less diversified.
• Policy Implications: Understanding the different dimensions of diversification is essential for designing effective policies that align with a country's structural and socioeconomic characteristics.

Key Findings and Implications

• Africa is home to eight of the world’s fifteen least diversified countries, according to the IMF's Export Diversification Index.
• Informal employment is widespread in Africa, with the informal sector accounting for 85.8% of total employment.
• Raw materials still dominate African exports (52% in 2017), although some subregions (e.g., Southern and East Africa) show more diversification.
• China and India have become Africa’s largest trade partners, surpassing the United States.
• Fiscal diversification is crucial for sustainable economic transformation, as it reduces reliance on volatile revenue sources and enhances public spending effectiveness.
• Taxation plays a central role in both fiscal diversification and governance.
• Subnational differences in economic diversification suggest that policies must be tailored to regional contexts.

Conclusion

Economic diversification is a multifaceted process that involves structural transformation, trade expansion, and fiscal reform. For Africa, the challenge lies not only in diversifying the economy at the national level but also in addressing subnational disparities and improving institutional capacity. The paper underscores the need for more research on fiscal diversification and highlights the importance of aligning policy tools with the structural characteristics of African economies to achieve sustainable and inclusive growth.