Investigating the effects of globalization on economic sophistication in selected African countries

Abstract

This research investigates the effects of globalization on economic sophistication for 27 African countries over the 1996–2017 period by employing Driscoll and Kraay standard errors and system generalized method of moments. We find that globalization enhances economic sophistication. Accounting for the dimensions of globalization, the results show that economic, social, and political globalization matter for enhancing economic sophistication. Furthermore, the decomposition of economic and social globalization indicates that financial globalization, trade openness, and FDI enhance economic sophistication, whereas Internet usage negatively affects economic sophistication. Policies to sustain the global integration pathway can enhance the diversity and sophistication of products in African countries.

Effects of terrorism and economic policy uncertainty on economic complexity in Africa: A study of the moderating role of governance institutions

“…The results in Tables 6 and 7 indicate that physical capital stock has a negative and significant impact on economic complexity in Africa. Not only does this finding contradict economic theory but it also contradicts previous studies such as Nguea andFotio (2021), andYalta andYalta (2021), which suggest that capital accumulation can stimulate economic activities. However, our finding aligns with the reality of many African economies that have been struggling with the challenges of poverty, unemployment, and low levels of capital accumulation.…”

“…Recent studies in the literature (e.g. Ahmed et al, 2022;Balland et al, 2022;Hausmann et al, 2014;Hidalgo & Hausmann, 2009;Ncanywa et al, 2021;Nguea et al, 2022;Sepehrdoust et al, 2022;Zhu & Li, 2017) have amplified the importance of economic complexity by demonstrating that sophisticated economies have more diversified exports compared to less complex economies. Other studies that have also highlighted the benefits of economic complexity at regional and national levels include Sweet and Eterovic (2019), Sepehrdoust et al (2019), Vu (2020), Shahzad et al (2021), Ajide (2022) and Kamguia et al (2023).…”

Broadband use and trade facilitation: Impacts on bilateral trade of sub‐Saharan countries

“…Regarding broadband use impacts, we expect different impacts on trade flows in different groups of countries. Differences in trade structure and specialization affect countries differently, according to the type of traded goods (Nguea et al, 2022). The empirical evidence shows that greater use of ICT relates to increased exports of more complex products (Wang & Li, 2017) since these products embed a greater degree of differentiation and sophistication.…”

Financial development and economic complexity: The role of country stability

“…The next determinant of economic complexity established in literature is globalization. Nguea et al (2022) recently argue that the range and sophistication of products in African nations can be increased by policies that support the global integration pathway. Their findings further demonstrate the importance of political, social and economic globalization in raising economic sophistication.…”