Economic complexity to boost the selected sub-Saharan African economies

Abstract

Orientation: Economic complexity is a measure of productive capabilities indirectly by looking at the mix of sophisticated products that countries export. The economic complexity index proposed a proxy for diversity and ubiquity of products in the export basket. Research purpose: This study seeks to determine if economic complexity can influence the inequality measured by the Gini index in some selected sub-Saharan African countries. Motivation for the study: The need for the study emanates from the notion that that economic complexity can reduce income inequality hence it is imperative to investigate this relationship in the sub-Saharan African region where most countries produce few sophisticated goods that are also labour-intensive. Inadequate literature within the African continent has also contributed to the formulation of this study. Research approach/design and method: This study employed the autoregressive distribution lag (ARDL) model to analyze a panel data set, which includes eight sub-Saharan African countries for the period 1994–2017. Main findings: We found that economic complexity can reduce income disparities. Practical/managerial implications: Sub-Saharan African countries should shift their productive capabilities and resources from primary to sophisticated products in the manufacturing and services sector to increase economic complexity and reduce inequality. Contribution/value-add: The study makes an important contribution to the debate about the relationship between economic complexity and income inequality in the sub-Saharan African context and it is envisaged that it will inform the actions of the decision-makers to drive future productivity and prosperity in the region.

Keywords

• economic complexity
• inequality
• panel auto-regressive distributive lag
• sub-saharan africa
• gini
• exports