Economic complexity is an indicator of a nation's productive capabilities. It therefore determines the nature and quality of the products that a country can put up for exports. This suggests that building economic complexity can serve as a channel through which African countries can boost export competitiveness. To this end, the impact of economic complexity on the export volume of Africa's top 10 exporting countries which jointly account for about 78% of total trade volume on the continent for the period 2000-2018, is examined. Employing a parametric common correlated effects mean group estimation technique and a non-parametric time-varying model with fixed effects technique, this study shows that economic complexity is indeed a determinant of export competitiveness. However, its effect is not as powerful as those of GDP, real exchange rate, trade openness and foreign direct investment. This suggests that, although policies that emphasize economic complexity are useful, they should not be treated as stand-alone policies. Instead, governments should adopt holistic trade policy reforms that take economic complexity into account, along with other factors such as exchange rates, economic growth, trade openness and foreign direct investment.
Research Purpose: The paper investigates the impact of the backward integration policy on manufacturing firms’ value added in Nigeria. It complements the existing literature and extends the frontier of knowledge by evaluating the impact of backward integration policy (local raw materials as proxy) on manufacturing firms’ value added in Nigeria. Design/Methodology/Approach: Firm-level data were sourced from the annual reports and statement of accounts of 49 sampled manufacturing firms, Central Bank of Nigeria statistical bulletin, National Bureau of Statistics annual abstract and Nigeria Customs Service tariff books for the period (2002-2020). The Fisher-type Augmented Dickey-Fuller (ADF) unit root test procedure was employed to examine the stationarity properties of each of the variables used in the study. The test was necessary to verify the time series property of the panel data employed. Thereafter, the Pooled Ordinary Least Squares (OLS) method was employed for the regression. Findings: The findings show that backward integration policy through the use of local raw materials in production significantly led to an increase in manufacturing firms’ value added in Nigeria. An increase in the use of local raw materials in production leads to an increase in value added by all sampled firms across manufacturing industries in Nigeria. The findings also reveal that fixed assets, employment, energy cost and exchange rate have a significant positive influence on the value added of all sampled manufacturing firms, while the tax has a significant negative coefficient, implying that as tax paid by firms increases, the value added of manufacturing firms declines in Nigeria. Originality/Value/Practical implications: Most previous studies focused on a single industry, but this study investigates the impact of backward integration policy on manufacturing firms’ value added in Nigeria. The study covers a wide range of firms and industries more than previous studies. It uses firm-level and panel data of manufacturing firms in Nigeria, which makes the study unique. It is the first study that hypothesises that backward integration can be used to improve the value added of manufacturing firms and consequently reduce import dependency, promote Nigeria’s product competitiveness and create more employment in Nigeria.
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