Diversification of Exports and Vulnerability of the Economies of Sub-Saharan African Countries: Role of Dependence on Natural Resources

Abstract

Export diversification in Africa is a topic of great interest, but its impact on economic vulnerability has not been sufficiently studied. Using a dynamic and panel threshold effects, this article examines the role of natural resource dependence in the relationship between diversification and economic vulnerability within a sample of 22 countries of the sub-Saharan Africa. We consider the modified Finger-Kreinin index and the share of manufactured exports in total exports as a measure of export diversification. Our results show that export diversification is a means of substantially reducing the level of economic vulnerability to which countries' economies are exposed. However, its effect on reducing the level of economic vulnerability is effective for a level of natural resource dependence below 38.7%. These results imply that it is important to take into account the threshold thus identified in the reorientation of their diversification policy based on a strategy of regional integration.(original abstract)